Water Bill [HL]

Lord Whitty: My Lords, I beg to move that the Report be now received. In moving this Motion, perhaps I may, with the leave of the House, clarify a rather unusual position that we have entered into on one particular aspect of the Bill. It relates to the issue of fluoridation.
	There has been some discussion as to whether the matter should be included in the Bill. I can announce today that it is the Government's intention to bring forward in this House an amendment relating to fluoridation. We shall seek to have the Bill re-committed for the sole purpose of considering the proposed amendment. It is provisionally proposed that that business would be tabled for 9th July, and that the Report of that re-commitment, and Third Reading, would also be taken on the same day—all of that business being in the Chamber. The amendment will be fairly straightforward. I hope that the House will agree that, in the circumstances, since the amendment does not have a bearing on any other part of the Bill, that is the best way to proceed. I beg to move.
	Moved, That the Report be now received.— (Lord Whitty.)

Baroness Byford: My Lords, I should like to record my thanks to the Minister. Fluoridation is a highly controversial issue, whether one is in favour of it or against it. This decision has given the House an opportunity to have a full debate on a matter on which many noble Lords will want to express their view. I am grateful to the Minister and to the Government for agreeing to take the amendment on the Floor of the House and not in Grand Committee. It is only appropriate that that is where it should be taken.

On Question, Motion agreed to.
	Report received.

Baroness Byford: moved Amendment No. 1:
	Before Clause 1, insert the following new clause—
	"DUTY TO CONSERVE WATER RESOURCES
	The Secretary of State shall have a duty to devise and implement measures to ensure that all entities and persons who use water do so without wasting it."

Baroness Byford: My Lords, this amendment is a re-worded version of our Amendment No. 3 which was debated at length in Committee. It reflects a number of contributions made in that debate. We believe that it is essential to ensure that people have a duty to conserve water. At various stages of the Bill we have referred to efficiency and conservation. Both are important, but they are separate issues.
	When the amendment was originally proposed, it was generally welcomed; however, there was a clear inference that it could be improved if we looked at it again—so that is what we have done. In Committee, the Minister indicated concern that a general duty laid on the Secretary of State would confuse the powers and duties already given to the water companies, Ofwat and the Environment Agency. I disagree.
	We considered this last point carefully, and concluded that it is a fragile argument. Nonetheless, by expanding the range of the duty laid on the Secretary of State to include devising and implementing measures, we feel that we have overcome the objection. Moreover, the amendment as now worded makes it clear that all users of water are affected, be they private individuals, companies, or public bodies.
	During debate on the matter there has been more than one comparison with other entities. I recall in particular the noble Baroness, Lady Young of Old Scone, referring (at cols. GC65–GC66 of the Official Report of 27th March 2003) to sewage treatment, the integrated pollution prevention and control regime as it affects factories and the nuclear power industry. I feel that the water industry as it is placed today is little different from those.
	The effects of climate change are a matter for informed comment and serious conjecture. In the past two to three weeks, at least one "expert" has been given air time on Radio 4 to dispute that what is happening now is caused by man's actions or has not happened in the past.
	The Water Bill has to contain provisions to meet what may or may not be a rapidly worsening situation. We believe that conservation should be a watchword for life in the West in the 21st century. A month or so ago, "Thought for the Day" revealed that people in this country cast more light on their back garden decking than was used to power the Eddystone lighthouse.
	I do not have the figures, but I am sure that the amount of water used to wash cars must have increased out of sight compared with the previous century, when cars had just come into being. The national preoccupation with regular baths and showers may be highly praiseworthy, but it does not lead to a frame of mind where water conservation is paramount. The proliferation of nurseries and the sale of plants and seeds in a wide range of shops makes it fairly certain that more and more water is going to garden use.
	Industry and agriculture have put in place many measures to conserve water. While they have been thus occupied, other users—particularly domestic customers—have been merrily exercising our "right", as we consider it, to a growing if indeterminate share of a national resource which most regard as unending.
	The Daily Telegraph gardening supplement of 17th May produced a league table of English counties ranked according to their horticultural worth. It was compiled from a number of essential elements, one of which was rainfall. Cumbria scored 10 out of 10; Cornwall 9; Lancashire 8; Devon 7; and Somerset 6. However, all the remaining 33 counties were awarded 5 or fewer, and Essex, Norfolk, Cambridgeshire, Lincolnshire, Suffolk, Warwickshire, Bedfordshire, Northamptonshire and Nottinghamshire all rated merely a single point.
	The Government have stated their intention to encourage the building of some 400,000 new homes. They are also consulting on massive airport construction. They have pointed to new hospitals and prisons, all of which will use vast quantities of water. The Secretary of State must have a duty to ensure that every person in every role and position that they occupy has a duty to conserve water. What better place to express that duty than at the start of this important Water Bill 2003? I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, we on these Benches support the amendment. We believe that it is right to put this commitment at the front of the Water Bill. The Water Efficiency Awards 2003, mentioned last week in your Lordships' House, showed again the enormous effect that small efforts on the part of individuals and creative innovation on the part of industry can have.
	In Committee, we discussed such measures as the labelling of water appliances, and these Benches brought forward an amendment on the subject. The change of lifestyle referred to by the noble Baroness, Lady Byford, is a long-term issue, but it is correct to encourage the work to start now, with the Secretary of State having a duty to ensure that it continues and results in water being conserved in the longer term. Later in the Bill, our Amendment No. 155, addresses the duty of other government departments to do their bit for water conservation. However, it is appropriate to have this new clause as the starting point for the Bill.

Baroness O'Cathain: My Lords, I support my noble friend Lady Byford in this amendment. It is important that the matter should be stated clearly before we get into the nitty gritty of the Bill. I wish to flag up another issue to which I shall return on Report: we do not value water in anything like the way we should. For example, we think that water comes out of the sky, is in the rivers and the sea, and should be free. Perhaps there is a charge because it must be treated and flow through pipes, but we do not realise what a scarce resource it is. We must use every instrument at our disposal to try to ensure that we do not waste water. It is not just for the chattering classes to think about resources, annual rainfall and methods of getting water through the system to homes, offices and factories. Rather, we should impress on everyone that water is a valuable commodity.
	The current method of charging for water, another issue I shall raise, means that most people assume that water charges are another tax rather like council tax. Generally speaking, water charges are based on the value of the property. There is therefore no incentive to use more, or worse still, to use less—no incentive at all. Unless all governments grasp the nettle, do what is done in every other major developed country and bring home the fact that water is a very scarce resource which must be paid for according to use, we shall get nowhere.

Lord Whitty: My Lords, we discussed similar amendments in Committee when I said that I sympathised with the objective and would consider whether an amendment was necessary. I endorse the overall sentiments expressed so far. However, the new clause is widely drafted and refers to a duty to develop,
	"and implement measures to ensure that all entities and persons who use water do so without wasting it."
	That means everyone throughout the water cycle. It is the responsibility of the Secretary of State to ensure that none of us wastes water. It would be difficult to provide that general duty on the Secretary of State without giving the means to implement it, and I suspect that some of the means would be subject to civil liberty considerations. Public authorities are a different issue, and later on we shall consider an amendment in the name of the noble Baroness, Lady Miller, that partly relates to that. Measures, are already in place, or are provided for elsewhere in the Bill, to further water conservation in that respect. For example, Clause 76 introduces a new duty on water undertakers to further water conservation which will expand on their existing duties to maintain an efficient water supply system and to promote the efficient use of water by their consumers.
	I understand that the Water Industry Act 1991 already has various relevant provisions, including sanctions against the waste, misuse and undue consumption of the water supplied by undertakers. The Water Supply (Water Fittings) Regulations 1999 also place controls on certain water fittings and appliances for that purpose.
	We considered carefully in Committee amendments to impose a duty on the Environment Agency to ensure that all abstractors use water efficiently. As a consequence, we are bringing forward a government amendment which will extend Section 6 of the Environment Act 1995 to make it clear that the agency has a duty to secure the efficient use of water resources. Therefore, existing legislation and this Bill already provide sufficient requirements with regard to the role of public agencies. This amendment goes somewhat further without necessarily supplying the means to achieve it. I believe that it goes a step too far, albeit that I agree with the sentiments expressed by the noble Baroness, Lady O'Cathain, in relation to the general approach to water in this country and in other developed countries.

Baroness Byford: My Lords, I am disappointed by the Minister's response. Can he tell the House how much water is used by individuals compared with public bodies and businesses? I suspect that the bulk of water is used by individuals. If that is so, that adds huge weight to my amendment. If the Minister is saying that my amendment is not worded correctly, I have two options left to me: to divide the House, which I am not frightened to do, or to ask the Minister whether he would return with a simple amendment at Third Reading that will reflect the desire of the House to put a duty on individuals to conserve water, in which case I would not divide the House. I am left with that dilemma as I am not satisfied with the Minister's response. Does he wish to come back on that point before I decide what to do?

Baroness Farrington of Ribbleton: My Lords, perhaps I should remind the House that, at Report stage, questions to the Minister must be raised while he is on his feet. I am sure that my noble friend will write to the noble Baroness on the point that she raises.

Baroness Byford: My Lords, I am grateful for that response. I should have jumped in and asked that question of the Minister before he sat down. I am not satisfied so I shall test the opinion of the House.

On Question, Whether the said amendment (No. 1) shall be agreed to?
	Their Lordships divided: Contents, 89; Not-Contents, 76.

Resolved in the affirmative, and amendment agreed to accordingly.

Baroness Miller of Chilthorne Domer: moved Amendment No. 2:
	Before Clause 1, insert the following new clause—
	"PROTECTION OF INLAND SURFACE WATERS, TRANSITIONAL WATERS, COASTAL WATERS AND GROUNDWATER
	(1) The Secretary of State shall by regulations ensure the timely establishment of a working framework that furthers the establishment of practices required by Directive 2000/60/EC of the European Parliament and of the Council (hereafter referred to as the "Water Framework Directive").
	(2) The regulations under subsection (1) shall in particular—
	(a) prevent further deterioration of and protect and enhance the status of the aquatic ecosystems and, with regard to their water needs, terrestrial ecosystems and wetlands directly depending on the aquatic ecosystems;
	(b) promote sustainable water use based on a long term protection of available water resources;
	(c) enhance the protection and improvement of the aquatic environment through, inter alia, specific measures and targets for the progressive reduction of discharges, emissions and losses of the priority hazardous substances;
	(d) ensure that for surface water the highest ecological and chemical status possible is achieved, given impacts that could not reasonably be avoided due to the nature of human activity or pollution;
	(e) for groundwater, ensure the least possible changes to good groundwater status, given impacts that could not reasonably be avoided due to the nature of human activity or pollution;
	(f) contribute to mitigating the effects of floods and droughts, in particular by measures to be developed as appropriate to each river basin according to policies developed by each river basin management committee (as defined in section 64).
	(3) The Secretary of State or the National Assembly for Wales, as appropriate, shall set targets for the achievement of the measures set out in subsection (2), the first set of targets to be introduced in December 2004, to be reviewed every six years thereafter."

Baroness Miller of Chilthorne Domer: My Lords, the amendment introduces the Water Framework Directive principles on to the face of the Bill. Unless the Government accept something along these lines, in 2003 we shall have a piece of legislation containing over 200 pages, and in this House alone we shall have spent 10 days on it, that will not even once mention the Water Framework Directive which represents the biggest positive change in our approach to water. The Water Framework Directive offers major opportunities, as the Environment Agency said,
	"to improve the whole water environment and promote the sustainable use of water for the benefit of people and wildlife".
	The aims of the directive are something to which we subscribe fully. It will realign the management of water in the widest sense and its proper implementation will bring tremendous environmental and social benefits. But it will also bring huge changes in the way in which farmers manage their land, industry manages its processes, planning authorities manage the demands of development and communities in general manage their activities.
	Implemented properly, it will bring cost benefits of the kind explained in Committee by the noble Lord, Lord Haskel, and it will be an economic good. It will move the status of all kinds of water bodies—rivers, lakes, estuaries—from unknown or dubious quality in biological terms to excellent. It will be a great force for environmental good.
	I believe that if it is implemented piecemeal, without clear targets and under resourced, it will not bring those benefits and those on the sharp end of implementation—industry, farmers and so on—instead of being part of the process of planning for the changes, will just be the subject of enforcement penalties and bad feeling. The framework directive has to be transposed into national law by 22nd December this year, a matter of weeks from when this Bill is expected by the Government to receive Royal Assent.
	The first river basin management plans must be in place by 2009. That might seem a long way away, but six years is a short timescale to define, with public agreement, what methods of working there should be and to what boundaries and who needs to do what to their policies. One need only look at how long the well-understood process of local plans takes. This will be a whole new way of working.
	In Committee, the Minister said:
	"We have a perfectly adequate way of transposing that—as we normally do".—[Official Report, 27/3/03; col. GC46.]
	He went on to say that we did not need to transpose matters by primarily legislation; that we almost always transpose them by secondary legislation.
	The Waste and Emissions Trading Bill, which passed through your Lordships' House earlier this year, is a very good example of primary legislation transposing a directive and doing some other things. So we can have mixed legislation of that kind as the Government have just passed some through the House. That objection to my amendment does not stand.
	However, I took great account of what the Minister went on to say in Committee. She said that my amendment was not satisfactory in attempting to transpose the Water Framework Directive directly and that, as a purpose clause, it was not useful. My amendment now puts the Water Framework Directive on the face of the Bill. It simply lays out some main principles on which it asks the Secretary of State to set some targets and then to monitor progress every six years.
	I recognise that much more needs to be done to the transposition. I refer noble Lords to the Select Committee's report on the Water Framework Directive. It said that there was a palpable lack of urgency, and perhaps even a sense of complacency. The Government conveniently published their response to the Select Committee's report yesterday. Noble Lords will see that that response is not strong enough to allow us to think that this amendment does not need to be seriously considered.
	Perhaps the Minister feels that good progress has been made since the Select Committee's report, but the amendment invites the Government to ensure that progress really is made and monitored. I beg to move.

Lord Dixon-Smith: My Lords, we face a fortunate coincidence and then an unfortunate lack of action. The fortunate coincidence is that, almost uniquely in my experience, we have a European directive before us for implementation, as the noble Baroness said, by 22nd December of this year, at the same time as we are considering primary legislation in the same field and, in some ways and to some degree, with the same intentions as the directive.
	Of course, it is customary for convenience—because this kind of coincidence does not normally occur—to deal with the consequences of European directives through secondary legislation. That is not the proper precedent that we should be following. I have always held the view that the proper way to deal with these matters is through primary legislation: it has a better parliamentary scrutiny; we are more sure of what we are doing; and I should like to think that the ability to look at the consequences of European legislation through the primary legislative process is vastly superior to the secondary legislative process.
	We use the secondary legislative process simply as a matter of convenience because usually there is not room in the primary legislative programme. Governments arrange that programme and that is how the issue has been treated in the past. We have this coincidence and, from my point of view, we are dealing with the matter in the less beneficial way. I support the amendment on that basis. We should be doing much more than we are to incorporate this European directive into primary legislation. When push becomes shove—and if we have to do something about this and the Government are not going to concede—we may have to think about which Lobby to go through, but I do not think that it will take much thought.

Earl Peel: My Lords, I support the amendment. I have always had difficulty getting my mind around the complicated inter-relationships between primary and secondary legislation, and European directives and primary legislation. This is no exception. In Committee, I spoke extensively about my own experiences on the River Ure in North Yorkshire where we have been attempting to put together a river basin management plan through the good offices of the Environment Agency. For several reasons, we have failed to achieve that. On reading the amendment, I see that many of its objectives are ones to which we tried to adhere in North Yorkshire and failed. For that very simple reason, I support the amendment.

Lord Whitty: My Lords, the issue of whether anything is transposed to primary legislation or secondary legislation frequently arises. The noble Lord, Lord Dixon-Smith, and the noble Earl might always have held a different view, but, by and large, successive governments and Parliaments since 1972, regardless of the then government's view of the EU in general, have abided by the use of secondary legislation, except in very particular circumstances.
	As the noble Baroness, Lady Miller, says, it is possible to have mixed transposition, but only where the two issues are complementary. This Bill deals with issues different from those covered by the Water Framework Directive. That argument would be stronger had the Government not done anything about the transposition, as she and the noble Lord imply. The Select Committee to which the noble Baroness refers did not say that; nor did it say that we should use primary legislation. The committee observed that the important point was the effectiveness of the transposition of the directive into national law, not the means by which it was achieved.
	We have already started consultation on the transposition of the directive, which raises several issues not covered by the Bill, some of which have not been discussed, despite the wide-ranging debate on the Bill in Grand Committee.

Lord Livsey of Talgarth: My Lords, I thank the Minister for giving way. I have been waiting to hear his response on some issues. Is the Minister saying that, because the Water Framework Directive is EU legislation, by the process of this House it cannot appear on the face of the Bill in primary legislation? Why did the Government not introduce the Bill after the transposition of the directive? That would be much more logical.

Baroness O'Cathain: My Lords, before the Minister has a chance to reply, I wish to make some points. First, I thank the noble Baroness, Lady Miller of Chilthorne Domer, for telling us about the Government's response to the Water Framework Directive. I am afraid that I did not know about it until I heard her make the point in the House. Having gone straight to the Printed Paper Office to get the document, I quickly glanced through it. Recommendation 21 of the Select Committee asks about primary legislation. The Government respond:
	"The Government believes that secondary legislation is a suitable and well established method for implementing EC legislation".
	But the Select Committee's recommendation is very strong:
	"But until the administrative arrangements which will enable the Environment Agency to function as the competent authority have been properly explored, Defra cannot be certain that primary legislation is not required".
	We are now caught between two problems. The amendment, which we debated in Grand Committee, will probably be chucked out again by the Government. But these words add a good deal of merit to the arguments presented by the noble Baroness, both in Grand Committee and today.

Baroness Farrington of Ribbleton: My Lords, at the risk of being criticised once more for being a stickler for the rules, when the Minister is replying on Report it is possible to intervene only with a question to the Minister. With great respect, that was a statement, not a question. It is very difficult for me, because as Whips we are aware that there is criticism across the House on all sides that Committee stage procedure is creeping into Report stage. I am doing my best. I am conscious that there are those who will criticise me from both sides.

Lord Whitty: My Lords, to return to the central issue, in response to the noble Lord, Lord Livsey, it is not an absolute that one cannot transpose through primary legislation. But it is normal for us to transpose through secondary legislation unless we are dealing with a completely congruent set of primary legislation. The Bill is not primarily about the same areas that the Water Framework Directive deals with. It is about the governance, competition, consumer organisations and structure of the water industry. It is not about the quality of water supply in the same way; it is about regulation and the various powers of regulation. There is an overlap but not congruence.
	There would be stronger arguments for extending the scope of the Bill to include the whole Water Framework Directive if we had been dilatory in consulting and starting the transposition process. We have not. We have already had two stages of consultation. There will be a third one in the autumn, and we intend to complete the transposition by the end of the year. Therefore, it is not a valid argument to say that the Government are not getting on with transposition. We are, and, in so doing, we are taking into account the responses to the various consultations. Simply to bang the provisions into a Bill that deals largely with related but not congruent matters would not be a sensible procedure for the House. I therefore ask the noble Baroness not to proceed with the amendment.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. Having re-read my amendment in the light of his words, I believe that it introduces the idea that there must be timely establishment of the working framework. All it asks the Secretary of State to do is to ensure that the transposition is timely. It is hard to see why the Bill is the wrong place for it when it introduces some primary legislation—on abstraction and so on—that is necessary because of the directive. As the Minister reminded us in Committee, it was necessary because the directive would require it.
	I am grateful to the noble Baroness, Lady O'Cathain, for pointing out the Government's response to recommendation 21 of the Select Committee report. I, too, had underlined that paragraph, in particular, and the fact that the Government should publish a legislative impact study on the requirements of the directive.
	Often, good European legislation is unfortunately turned into bad national practice because it is too late or under-resourced. It is time to ensure that that cannot be the case with something as important as the Water Framework Directive. For that reason, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 2) shall be agreed to?
	Their Lordships divided: Contents, 94; Not-Contents, 89.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 1 [Licences to abstract water]:

Lord Dixon-Smith: moved Amendment No. 3:
	Page 2, line 8, at end insert "continuous"

Lord Dixon-Smith: My Lords, I should think that the Minister will be relieved to descend to a much more mundane and detailed matter. In Committee, he explained:
	"The temporary licences are intended to be used to cover one-off abstractions of a duration of fewer than 28 consecutive days where large volumes of water are needed for short periods".—[Official Report, 27/3/03; col. GC61.]
	He then gave examples of what he called "episodic events". We have considered the matter. A full licence does not imply use on consecutive days, nor does a transfer licence. It is wrong to use the same form of words for a temporary licence if the intention is that it should be for consecutive days. Inserting the word "continuous" to describe the period of 28 days would make the position absolutely clear. Otherwise, there is an element of doubt in the Bill's wording. This is a small amendment, but we think it significant. I beg to move.

Lord Whitty: My Lords, I was inclined to agree with the noble Lord, Lord Dixon-Smith, but I was strongly advised against it. In so far as the amendment would provide clarity in this context, it would provide "un-clarity" elsewhere. I am reliably informed that it is well established in law that the phrase,
	"a period of less than" means a continuous period. If we inserted "continuous" here, there would be doubt as to whether every other reference in legislation to "a period" continued to have that established meaning. As usual, I take the advice of my learned friends seriously, and, with some regret, I must oppose the noble Lord's amendment.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his tacit agreement with the principles that we are enunciating, even if he says that, for other, practical reasons, the amendment would be unwise. I do not want to be responsible for throwing the British legal and legislative system into chaos, so I accept the explanation and beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Lord Livsey of Talgarth: moved Amendment No. 4:
	After Clause 1, insert the following new clause—
	"IMPOUNDING TO CREATE LARGE RESERVOIRS
	The Secretary of State in England and the First Minister in Wales shall have the power to refer planning applications for the creation of large reservoirs to a public inquiry." The noble Lord said: My Lords, in moving the amendment, I thank the Minister for several contributions that he made during the discussion of a similar amendment in Committee. Having taken account of that, I have tabled a simplified version of an amendment that we tabled in Committee. The amendment relates to impounding to create large reservoirs and takes account of the impact that that will have on the social fabric of rural communities in the area of the reservoir and on the rural environment. Often, large reservoirs in the West and the North take up scarce flatland that, in fact, sustains the adjoining uplands. Often, it is the only flatland in the area. It is an important issue in Wales and the North of England, in particular, where such flatland is very precious. The planning process is at the heart of the amendment. In Committee, the Minister was able to allay my fears to a large extent. Applications will go through a proper planning process, using the planning powers of local authorities and national parks, where they are the planning authority. The Minister also said that it would be possible to make appeals to the Secretary of State in England and the First Minister in Wales. As it happens, the Secretary of State and the First Minister often announce the result of appeals made to them, usually through an inspector that they have appointed. I thank the Minister for stressing those points. The amendment takes account of all that, but it would insert a power—I would like it to be a duty—for the Secretary of State in England and the First Minister of the Assembly in Wales to refer planning applications to a public inquiry. That is the one point on which I need some satisfaction from the Minister. The ability to refer planning applications to a public inquiry is important. If there is an enormous reservoir that causes great destruction, there must be participation by the public, who should be able to make representations in a public consultation. That is particularly important for local representation. There has been a series of tragic events, not only in Wales but in parts of England, with reservoirs being foisted on local communities. That does not happen these days, but I want to make sure that it will not happen, and we should have a public inquiry to ensure that. The public inquiry should include not only local representation but expert representation. There should, for example, be consideration of environmental impact assessments and the social impact of the loss of communities. In Wales, there is the question of the loss of the Welsh language, a loss that cannot be made good. There is the impact on farming, on the environment and on the communities themselves. If the Bill provides for a public inquiry, it will provide the necessary safeguards for public and local interests. The public will know that an independent inspector can reach an objective decision on such great disruption to communities and to the environment. In Wales, the creation of large reservoirs has become a political cause celebre. I know that it is not entirely legal to quote in the Welsh language in this place, but I must say that the phrase "Cofiwch Dryweryn"—"Remember Tryweryn"—is plastered over walls throughout central and north Wales as a rallying call against the oppressors. If we could have a public inquiry, there would be no oppressors. Justice will be seen to be done, not to be something that occurs behind closed doors. I beg to move.

Lord Dixon-Smith: My Lords, when public participation was introduced into planning, the grounds for doing so were that it would satisfy the public's concern about major planning decisions—even small planning decisions—because everyone would have an input into the decision-making process. Of course, the consequence was that the public proposed a multitude of solutions. In the end, there can be only one decision. My gentle experience was that, on the whole, the public was, as a result of the process, more dissatisfied than satisfied.
	We are dealing here with major, highly controversial planning changes, in the form of large reservoirs. We do not know what a "large reservoir" is. There is a definition of "small reservoir" floating around in the Bill—25,000 cubic metres—but there is no definition of a large reservoir. That should be determined. Whatever happens, the creation of a large reservoir will, inevitably, be controversial. For those directly affected, it is almost bound to be an intolerable imposition. That is the reality.
	A public inquiry would permit all the issues to be thoroughly explored. It would bring everything out into the open, so that the public can, if necessary, assess the overall background. There can still be only one decision. I have a shrewd idea—it cannot be a certainty—that no water undertaking will put forward an application for such a major reservoir without having a strong case, driven by necessity, for so doing. It is inevitable that, in the end, one party or the other—the local community or the water utility—will be dissatisfied with the answer. Another dreadful reality in this circumstance is that relatively few sites are available for the construction of large reservoirs. Regrettably, communities can move and in the past they have done so.
	Having said all that, I support the principle of the amendment, but I am fairly confident that I know the planning system well enough to believe that something of this nature could not be installed without a public inquiry. I have no doubt that the Minister will make that clear in his response.

Baroness Miller of Chilthorne Domer: My Lords, my noble friend Lord Livsey described what happened when large reservoirs were created in Wales. Since then, there has been the introduction of the Aarhus Convention in the European Union, which is supposed to ensure that the public have a much greater say and more rights in terms of input into decisions of this kind. It would be very helpful if the Minister could make some reference to that in his reply.

Lord Whitty: My Lords, I do not want to delve too much into the painful aspects of Welsh history or the merits or otherwise of public participation in planning decisions. The noble Lord, Lord Dixon-Smith, is right. I appreciate that this amendment has been changed somewhat, but it is unnecessary. In all those circumstances, there would be a public inquiry because planning permission for a new large reservoir would have to be sought from the local planning authority, as per normal. Indeed, there would probably be a compulsory purchase dimension as well. It is impossible to conceive of such a proposition that would be uncontroversial. Therefore, there would almost certainly be a public inquiry. Indeed, if the proposed reservoir were of regional or national significance, as it probably would be, the "call-in" powers would be used were there not to be a public inquiry. The Aarhus Convention, to which the noble Baroness, Lady Miller, referred, relates to public participation in decision making, which, in the UK context, would mean public inquiry. Although it is not directly applicable yet, proposals are still in preparation to give effect to those principles. That also points to having a public inquiry. Therefore, in all circumstances, for a large reservoir—I agree that there is a definitional issue, but the noble Lord's amendment does not help us with that—it is inconceivable that there would not be a public inquiry. The amendment is therefore unnecessary.

Lord Livsey of Talgarth: My Lords, I thank the Minister for that reply. He has clarified the situation to a considerable extent. I am grateful for his comments, which are now on the public record. In particular, the issue of compulsory purchase is a running sore in terms of whole villages being flooded—indeed, the local church or chapel, halls, farms and so forth—and we cannot take it lightly. A public inquiry brings about transparency, fairness and a considerable element of justice in that people are able to make representations. As regards the Aarhus Convention, I thank my noble friend Lady Miller for making that particular point. I thank, too, the noble Lord, Lord Dixon-Smith, for his thoughtful speech on this issue. However, I should like to point out to him that, yes, people complain, but it is not a normal complaint when a whole language can disappear from a valley when only about 19 per cent of the Welsh population speak Welsh. Indeed, the language can die out as a result of a reservoir being established in a Welsh-speaking community. Therefore, there are very important issues here which are not of the normal type in terms of social responsibility. I thank everyone who has spoken to this amendment and the Minister for his reply. It has given us a considerable measure of transparency as to what will happen in future. As this will be backed up by European legislation, I should not expect to see again what happened 30 and more years ago in Wales. I am reassured and therefore beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 2 [Restrictions on impounding]:

Lord Dixon-Smith: moved Amendment No. 5:
	Page 2, line 42, at end insert—
	"( ) A general consent to impound water in January, February or March will be notified, catchment area by catchment area, by the Environment Agency on those days to which it applies." The noble Lord said: My Lords, in moving Amendment No. 5, I shall speak also to Amendment No. 6. In Committee, the Government's response to the amendment, as it was then worded, was to support the intention of facilitating the storage of floodwaters without unnecessary bureaucracy. The amendments, as now worded, would exempt small reservoirs filled only in the early part of the year at times and in places notified by the Environment Agency as having sufficient water flow to allow the impoundment. We consider that this will get around the problem of abstraction taking place during a winter drought. At the same time it will reduce both the workload and the cost to the agency, landowners and farmers. We hope that the Government might look more favourably at this improved amendment. The concept of being able to store relatively small quantities of water freely and easily could have a very significant environmental benefit in country areas. I have built a small reservoir myself, and I am reminded that I should have declared an interest at the beginning of the proceedings as the holder of an abstraction licence. These small reservoirs enhance the environment considerably. They are very good for wildlife and they often create small wetland areas. There are trees, shrubs and wild fowl, which otherwise would not be there. The more we can do to encourage small reservoirs, the better. The more we can free the administrative machine so that it can deal with the major issues which really are important and not have to deal with these smaller reservoirs, the better. I was going to say that they are "as nature intended", but of course a reservoir by definition cannot be that. It is an artificial creation. But the more natural it is, the more we should seek to free it from regulatory procedures. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I support all that the noble Lord, Lord Dixon-Smith, said. In speaking to our Amendments Nos. 7 and 8, grouped with Amendment No. 5, we have tried to give the Government yet more latitude to accept something along these lines by not specifying which months may be the wettest. We have left it to the Environment Agency to decide. In Committee, I mentioned January, February and March, but in subsequent discussions and on looking at the figures, I could see that in some years perhaps November and December might be more applicable. As the noble Lord, Lord Dixon-Smith, so eloquently said, the spirit of these amendments is to achieve two objectives; namely, the environmental good of creating small ponds and wildlife areas and allowing the farmer to use the top of that water for irrigating his crops. It would be for him to determine the balance between the use for irrigation and the wildlife areas. I understand that if a farmer digs a hole in the ground that just fills up naturally, that will not be subject to a licence. If he makes an impoundment across a stream, that will be subject to a licence. There is still confusion as to when run-off water from the ground that appears in the form of a stream in winter is a stream, and when it is merely heavy water flooding over fields. Were there not this confusion, we would not need these amendments. I understand why the Government and the Environment Agency might resist making impoundment across a stream something not subject to a licence. However, unless they are willing to accept the amendments, I believe that the Government need to reflect further because, as the noble Lord, Lord Dixon-Smith, pointed out, the situation is still not encouraging the end result we all wish to see.

Lord Whitty: My Lords, I understand what the noble Lord is trying to do with these amendments, but there are quite serious practical problems here. Amendment No. 5 aims to provide for a general consent to impound winter floodwater, subject to certain conditions. Its operation is linked to impounding works that can store water only during defined months, as provided for in Amendment No. 6. Amendments Nos. 7 and 8 offer some flexibility over the definition of those months. However, in either situation it is doubtful whether a general consent could be satisfactorily tailored to meet the specific environmental needs and resource management of each site or watercourse. There is also the important practical problem that water captured during flood conditions then has to be stored, in-river, until needed. It is important to reiterate that the existing controls and the proposals in the Bill apply only to works to impound water that are constructed across a natural watercourse. The noble Baroness made that point. Excavations on land designed to collect and store winter rainwater and which do not impound a natural watercourse or intercept water contained in underground streams are not subject to impounding licence controls. The natural filling of such excavations during floods is not subject to any controls and the agency is already able to issue abstraction licences which allow water to be abstracted from rivers at times of high flows to fill those same excavations. So the system already provides a fair amount of flexibility. Activities to impound water on-stream, irrespective of whether they are also subject to the drainage consent process under the Reservoirs Act 1975, could have major implications for the overall management of water resources. If these activities were deregulated or subject only to a "general consent", as the amendments would provide for during the designated months, they could well have serious consequences for the ecology of the watercourse and possibly the passage of fish. It would also impair the ability of the Environment Agency to ensure adequate flows of water downstream of the impounding works for the health of the watercourse or for any other lawful users of that water at the times in question. Much of this relates to the predictability of the English weather. If we were to rely on the definition of the months referred to in some of the amendments, then clearly it would have been difficult to implement such a proposal this year in that it was much wetter in May than it was in February and March. The same would apply to any set of months. The following months could be subject to drought. We can have a winter drought, a spring flood and then a spring drought. If the changes which have taken place over the previous four months were repeated, it would impair the ability of the Environment Agency to operate the system over the subsequent months. While I understand why the amendment has been put forward, I do not think that it is appropriate. Of course the charging structure provides ways for the agency to encourage the winter storage of water for subsequent summer use in that charges for winter-only abstractions are only one-tenth those of summer-only abstractions. That provides an incentive, but to give an absolute exclusion, as would be the case under these amendments, does not seem sensible given the British weather.

Baroness Miller of Chilthorne Domer: My Lords, before the Minister sits down, can he say whether he is satisfied with the definitions set out in the present law between "surface water", taking the form of heavy waterflows producing a runnel down a field and therefore looking like a small stream, and what is meant by a "watercourse", which may dry out for nine months of the year?

Lord Whitty: My Lords, so far as the legislation can specify the variety of topography and rainfall described by the noble Baroness, I think I am satisfied that there is a difference between a watercourse that is full only intermittently and surface water resulting from a particularly heavy downpour, which forms the basis of the distinction. If legislation were to attempt to devise a more precise definition than that, we would find ourselves in more difficulty than is the case under the common-sense interpretation already in place in the legislation.

Lord Dixon-Smith: My Lords, I am grateful to the noble Baroness for her support and to the Minister for his explanation. As a matter of observation, I can say that in my dealings on this matter, a fairly satisfactory and flexible approach has been taken to the whole question. I appreciate entirely that one small bank put across a stream in a narrow valley impounding a certain amount of water might not pose a problem, but if a series of neighbours down the valley were to do the same it could be that no water would arrive at the bottom, which might well cause problems. I accept that there are potential difficulties in the absolute laissez-faire approach we are expounding, but the principle of trying to free from regulation as much as we can is correct. It was for that reason that we tabled the amendment. We shall study the Minister's explanation with some care, but at this stage and at this point in the day I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 6, 7 and 8 not moved.] Clause 3 [Existing impounding works]:

Baroness Byford: moved Amendment No. 9:
	Page 4, line 39, leave out "otherwise" and insert "in relation to England" The noble Baroness said: My Lords, this subject was debated in Committee on an amendment proposed by my noble friend the Duke of Montrose. It is hoped that my noble friend will be able to be with us later in the Report stage. In Committee, the noble Baroness, Lady Farrington, felt that at one stage she was getting into deep water and said she would come back on the issue. She stated that she would await enlightenment on cross-border river basins. Perhaps the Minister is able to expand on the matter this time around. Our major concern is that the wording could be used to enforce a different interpretation from "England" without such interpretation having to be debated in this House. If there is no such intention, then the wording appears at the least clumsy and perhaps out of line with normal usage. For instance, Section 91(1) of the Countryside and Rights of Way Act 2000 refers to,
	"the Secretary of State (as respects England)", but not as respects otherwise. If there is a hidden meaning behind the proposed wording, then the Government's intention should be made clear. It is unusual to see in one Act different words which mean the same thing, while this Bill contains the wording I have already mentioned. That is why we seek to leave out the word "otherwise" and insert instead, "in relation to England". I beg to move.

Lord Whitty: My Lords, I am in a slightly strange position with regard to this amendment. We looked at the concerns expressed by the noble Duke and other noble Lords in the last debate and felt that they were not valid. Indeed, I believe that the noble Baroness wrote to her noble friend and, I hope, to other noble Lords to explain that the intention was clear. However, while considering the totality of territorial definitions, we have found that we may need to table our own amendments on other issues, including, for example, the fact that the Scilly Isles have been left out of the current legislation as well as one or two other minor points. Therefore, while I do not accept the justification for the amendment, I think that part of it needs to be looked at again, but not the wording mentioned by the noble Duke in Grand Committee, which has been referred to again today. We should like to take the amendment away and come back on the points I have just mentioned rather than those proposed by the noble Baroness.

Baroness Byford: My Lords, that shows how useful these amendments are. I am grateful to the Minister for his comments. Given his undertaking to consider the issue of the right phraseology—presumably throughout the Bill—we are happy to withdraw the amendment. Amendment, by leave, withdrawn. Clause 6 [Rights to abstract small quantities]:

Baroness Byford: moved Amendment No. 10:
	Page 7, leave out line 38 and insert—
	"(i) domestic use on the holding;" The noble Baroness said: My Lords, in moving Amendment No. 10, I shall speak also to Amendment No. 11. In the discussions in Grand Committee on a small group of amendments concerning this subject, we gave the example of the historic situation where water abstracted by a farmer had been used to the general benefit of everyone on a holding. The Minister chose to interpret our concern as being solely with the protection of existing rights. That was not our intention. He assured us that the protection is already there, through the Water Resources Act 1991, for rights which existed prior to the 1963 Act. My interpretation of his interpretation is that he believed our concern was too narrow. The amendments relate to new abstraction rights. Many farms still comprise a farmhouse and one or two agricultural dwellings. Indeed, in some cases, such housing is not used for agricultural dwellings. Agricultural workers still grow their own garden produce and there is no reason to believe that a situation may not arise where such a worker would welcome a share in the water abstracted from a nearby river or stream. Farm buildings are also converted and let to tenants, who may or may not be agricultural workers and who may wish to have a garden and therefore use more water. As we understand the terms of the Bill and the Minister's response in Grand Committee, such usage would be prohibited. In Grand Committee the Minister said that, "any abstraction of up to 20 cubic metres per day for domestic purposes, regardless of whether the occupier uses the water, will be exempt".—[Official Report, 27/3/03; col. GC88.] In fact the Bill states that the exemption applies if the abstraction is carried out by or on behalf of an occupier and, "it is abstracted for use on that holding for either or both of the following purposes— (i) the domestic purposes of the occupier's household; (ii) agricultural purposes other than spray irrigation". My question is a minor one. I am sure the Minister will tell me that this comes under "domestic purposes", but presumably gardening or any other such activity by a member of a family, a tenant or anyone occupying such buildings on an occupied holding would be considered as agricultural purposes. It is only a small point and I am sure that the Minister will be able to clarify it.

Lord Livsey of Talgarth: My Lords, a further point needs to be made. Nowadays, many farm buildings are being converted into temporary accommodation—for example, for holiday purposes—as part of the diversification activities of farmers on holdings. Very often the supply of water for such accommodation comes from the same source. What will happen in that situation? The conversions diversify the income flow of farms. As we know, incomes from pure farming are, at the present time, very low indeed and it is important that farmers diversify to ensure that their net income is sufficiently viable to allow them and their families to remain on the holding in the future.

Baroness Farrington of Ribbleton: My Lords, we recognise that the amendments are similar in effect to the amendments discussed in Grand Committee. As I said then, they will not affect the way in which the new exemption for small abstractions applies to supplying domestic properties on an abstractor's land. I should like to clarify the issue of tied cottages on an abstractor's land. Such cottages fall within the meaning of "household" for the purposes of the clause. They will already remain within the exemption. The new exemption will allow any abstraction up to 20 cubic metres. The limitation to occupier's household applies only to the issue of protected rights. Premises which are let will be covered within the limit. All that the amendments would achieve is simply to extend the scope of the protected right associated with such an abstraction. It would extend it from domestic use for the occupier's household only, within the broader definition, to any domestic use on the entire holding of the abstractor. If the intention is to ensure that water abstracted under the exemption for small abstractions can be supplied to any domestic property on the abstractor's land, I have already reassured the noble Baroness that this is provided for in the new exemption. I hope that the noble Baroness will therefore feel able to withdraw her amendment. During our consideration of the amendments we have identified a need to bring forward further amendments at Third Reading to ensure that the system of protected rights can adequately deal with changes to the threshold for abstraction licensing. As to the meaning of the terms "gardening" and "horticulture", I believe that they are subsumed within "agriculture" except for those areas where they patently form a part of "domestic". Obviously there is a cross-over point somewhere along the spectrum but I find it easier not to define it in legal terms. It is a common-sense cross-over point.

Baroness Byford: My Lords, having had a late night last night, we are into common sense. I thank the Minister for that explanation. It has helped to clarify one or two of the points we raised. Interestingly, it has stimulated more thought and we shall come back with further amendments at Third Reading. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 11 not moved.]

Baroness Byford: moved Amendment No. 12:
	Page 8, line 2, after "work" insert "provided that such work will not impinge upon pre-existing licensed abstraction producing potable water" The noble Baroness said: My Lords, I return to an important issue that was raised in Grand Committee. The amendment has been brought forward again in order to seek clarification from the Minister. In Grand Committee he stated:
	"I will need to consider the issue raised by the water bottlers because in certain circumstances they have a specific concern. We may be able to deal with that in a different way".—[Official Report, 27/3/03; col. GC89.] For the benefit of noble Lords who did not attend the Grand Committee, perhaps I may raise one or two issues. During the Grand Committee debate there was a query whether the 12-year limit had been specified in writing by the Environment Agency. This time limit and its bureaucratic rationale was set out in detail by the Environment Agency in its policy document, Managing Water Abstraction, which was published in April 2001, and was confirmed again in the written guidance for stakeholders published in March this year. It is the Environment Agency's strength of attachment to the period of 12 years which causes so much concern. During the debate the Minister made some helpful statements about taking investment needs into account. We hope that in the pursuit of these amendments this can be clearly established as a principle. In the Environment Agency's guidance to stakeholders there is no reference to the payback on investment as a criterion for granting longer-term licences and this clearly needs rectification. In Grand Committee I referred to the depreciation accounting practices of the water utilities and it might be helpful to highlight some of the financial commitments there. The first feature is that investment is needed for business expansion, not only in bottling equipment but in new bottling halls, warehouses and connected infrastructure. The payback on such investment, which normally requires bank loans, is usually calculated at 12 years. Obviously, we will be speaking on investment at greater length later. We sought recognition from the Minister that environmental damage could be caused by drilling connected with exempted abstractions. The Minister was opposed to amending the Bill, but our advice from Environment Agency officials is that a legislative requirement to assess the impact of exempt abstractions is essential. I understand that the Government wrote to the Environment Agency on this issue but have not had clarification. Perhaps I can share with the House the technical point that natural mineral waters must be, to quote from the contribution of the British Soft Drinks Association,
	"free from pollution at source" and
	"have a consistent mineral content". I hope that the Minister can deal with this point in a slightly more sympathetic way than was the case in Committee. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I appreciate the noble Baroness explaining the purpose of the amendment at some length. We have said that as many abstractors as possible should come within the regime and be subject to the same level playing field. So, for the sake of consistency, and although we are interested in the Minister's reply, we do not support the proposal. We realise that there is a great market for and interest in bottled mineral water, but the Bill is also aimed at improving the quality and demand for ordinary drinking water from taps—a very important aim.

Baroness O'Cathain: My Lords, we are considering the Water Bill in the context of the United Kingdom—well, mainly of England. When it comes to potable water, there is a trend—which we cannot stop, much as I decry it—for people to drink bottled water when the water coming out of the tap is, as the noble Baroness, Lady Miller, says, more than adequate. Indeed, many of the tests have proved that there are fewer bacteria in the water coming out of the taps than in bottled waters. As we import an enormous amount of drinking water, I should have thought that, in the overall context of the balance of payments, if nothing else, it would be a good idea to examine the issue.

Baroness Farrington of Ribbleton: My Lords, I would like to write to the noble Baroness, Lady O'Cathain, on the importation of water. I know that there are some across the Channel and elsewhere who would be deeply offended. There are those of us who view the practice of buying water in bottles when we have already paid for it in the tap as a rather odd aberration—except in Wales, where Brecon water is obviously better than anything else. On time-limiting of licences, the agency can grant licences longer than 12 years; its guidance sets out criteria for doing so. It may be considered if the applicant provides a business case satisfying certain tests, one being that the lifetime of the infrastructure inseparably associated with the authorisation will extend over the desired period of validity. I hope that that is helpful. The clause that is the subject of the amendment seeks to extend the existing right of some abstractors of small quantities of groundwater to construct boreholes without a licence to all such abstractions. It is therefore a deregulatory measure. However, Amendment No. 12 seeks to introduce selective control of those boreholes that would have an adverse effect on a neighbouring source and introduce additional regulation contrary to the objective of further deregulating small abstractions that have no impact on the overall management of water resources—a point underlined by the noble Baroness, Lady Miller of Chilthorne Domer. The amendment seeks to prevent damage to adjacent potable supplies by controlling the construction of some wells or boreholes where the abstraction of water is to be exempted. However, it does so based on a selective test of adverse effect, which means that developers cannot know at the outset whether what they intend is exempt from control. They would not know in advance whether they might face criminal sanctions. We believe this is not workable. We recognise the concern raised, but we consider that the proposal is not justified to cater for the very few such problems that may arise and that there are sufficient safeguards available to protect water sources. I understand from our discussions in Grand Committee that a case was referred to by the noble Baroness in which a potable water supply might have been jeopardised by the construction of a borehole for a small abstraction. This case is one of the exceptions, and I believe it was resolved satisfactorily through the planning process. There are codes of good practice; the Environment Agency has one on its Internet site. There is also a British Standard on the subject. The well-drilling industry should take note of such codes to help ensure that incidental damage does not occur. I hope I have covered the points. If the noble Baroness, Lady Byford, would like me to reply in more detail on a particular case, I may be able to do so.

Baroness Byford: My Lords, I am grateful to the Minister for her good explanation. I am still somewhat concerned about the fact that this matter will not appear on the face of the Bill. On so many of the issues we discussed in Committee and will discuss again, it is suggested that provision is made for them—or it is implied. I have become very sceptical about Bills. I tell people that they want to worry if something is not on the face of the Bill and also if it is. There is often a gap left in-between when it comes to interpretation by whoever is responsible for interpreting it. However, I am grateful to the noble Baroness. As for there being only a few people affected, all small businesses start small and, with luck, grow into bigger businesses. If the idea is good, there are more businesses, and I would like to make sure they are all UK businesses, not importing water from overseas. The Minister referred to a particular case which I understand was dealt with satisfactorily. Perhaps I should push my local bottled water: Buxton is not far away, but much nearer to home is Swithland in Leicestershire, which the noble Baroness knows very well. I hear what she says and hope that her words come true when they are interpreted. At this stage, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 7 [Rights to abstract for drainage purposes, etc]:

Baroness Byford: moved Amendment No. 13:
	Page 9, leave out lines 13 and 14. The noble Baroness said: My Lords, the Bill says on page 9:
	"The restriction on abstraction shall not apply . . . within the district of an internal drainage board if . . . the water abstracted is transferred to another area of inland water— and,
	"the sole or main purpose of the transfer is to augment that other area". On page 10, the Bill states that land drainage does not include,
	"transferring water from one source of supply to another . . . solely or mainly in order to augment the latter". That may be interpreted as an exemption granted to a body—namely, an internal drainage board—for an activity that is then ruled out of order. Having read it and considered it again, we feel that that is a contradiction, for which I would be very grateful for a ministerial explanation. I beg to move.

Lord Whitty: My Lords, the exemption allows movement of water by an internal drainage board within its own district outside the licensing control. That is because it is for use within that district, which can be competently managed by the internal drainage board in that district. I am not sure what other use the boards would be making of the water than to augment the level of water that they had available. For whatever purpose they wanted to augment the level of water, they would need the exemption from what would otherwise be licensing for the purposes of raising the level within their own district. The provisions proscribe use for something outside that district. The noble Baroness may have in mind whether one could use the exemption from licensing for flood control purposes or protection of land that would otherwise be encroached on by water. The answer is, "Yes", but it would require an abstraction further upstream, which would raise or alter the level further downstream. The restriction is restriction within the area, to a quantum of water, and it is difficult to see how the amendment, by deleting that restriction, would make much difference in practice. One could argue either way, but the restriction is to within an area, and to delete the whole of those two lines would make that less clear.

Baroness Byford: My Lords, it just seemed very strange that on one page, one set of rules applies, and on the next page a different set applies. The matter is not worth pursuing at this stage, but perhaps between now and Third Reading the lawyers might consider it, as I may have made a mistake, or there may be some misunderstanding with which I have not got to grips. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 14:
	Page 9, line 36, at end insert—
	"( ) In the case of any emergency abstraction the Agency, upon receiving notice of the abstraction in question, shall investigate the current position under each of the headings listed in subsection (2A)(a), (b) and (c) above; and only if the danger no longer exists under any of those headings and if there is no perceived threat in the immediate future, may the Agency conclude that the emergency does not exist." The noble Baroness said: My Lords, the amendment arises from a debate surrounding a series of government amendments. It became clear that legislation defines the start of an emergency but not the end of it. The Minister seemed to admit that there is not even guidance on the subject; that is why we are returning to it. The amendment would put into the Bill an instruction to the agency that would make it clear when the agency might declare when an emergency did not exist. For the purposes of the Bill, that might be taken to be both when the emergency was over and when a particular situation did not amount to an emergency. I beg to move.

Lord Whitty: My Lords, the amendment proposes an express duty on the Environment Agency to investigate notice of an emergency drainage abstraction. It would normally be the abstractor rather than the agency that drew attention to that situation. The proposed amendment would require investigation of all cases, whether or not the agency was content that the abstractor had rightly called it an emergency situation and the agency was co-operating with the abstractor in dealing with the emergency situation. The amendment would confine emergency situations to the types of threat set out in the clause. But the agency is already bound to interpret emergencies in that way, and it would have to give reasons if it disagreed with an abstractor. The amendment aims to set down the criteria that would determine the grant of a licence for irrigation in the temporary transitional period. It is intended that transitional arrangements for all abstractions coming under licence control as a result of the removal of exemptions under the Bill will be covered regulations made under Clause 95. The regulations will be published in the normal way, before the commencement of the Clause 7. Some of the concerns that lie behind the amendment may be covered by the regulations. However, to stipulate as the amendment does is rather taking a sledgehammer to crack a nut, in that most emergency situations will be dealt with by co-operation between the Environment Agency and the abstractor. Any limitation to that will be covered by regulations yet to be published. There will be not only guidance but regulations.

Baroness Byford: My Lords, I am grateful to the Minister for that explanation. The discussions that we have just had included mention of the fact that regulations will be introduced to cover our concerns. I have to say again, as I have said on many occasions in Committee, that I am never enormously happy that so many things are done by regulation. We have already had that discussion. It is a small but important point. However, at this stage, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 15:
	Page 10, line 8, at end insert—
	"( ) In deciding to extend abstraction licensing to irrigation by virtue of subsection (5) above, the Agency shall have regard to the length of time such abstraction has been practised and the purposes to which it has been put."" The noble Baroness said: My Lords, we believe that the amendment is very important. When the subject was debated in Committee, many contributions were made and concerns were expressed by all speakers that the needs of those who use trickle irrigation are not met by the Bill. Trickle irrigation may be used by small enterprises, but there are many examples of businesses with a turnover and wage bills in excess of a million pounds. There is a strong fear that, because they have not had to have a licence in the past, their needs may be put to the bottom of the queue in any consideration of abstraction licences in the area where water is scarce. It is quite possible that a trickle irrigator may contribute more to the economy of the river basin than all the licensed abstractors put together. It is equally possible that a trickle irrigator may have been employing that method for longer than some licensed abstractors in the area. It is necessary that their proper concerns are catered for in the Bill and, at the very least, that those who were involved in trickle irrigation in the past must be consulted at the start of the discussions, when they are required to comply with the legislation. I beg to move.

Earl Peel: My Lords, I would very much like to support my noble friend's amendment. Those who have been involved in trickle irrigation are now feeling—it is no exaggeration to say—some degree of vulnerability, as they find themselves being brought into the abstraction licensing system for the first time. As my noble friend said, many of those operators—horticulturists, principally—have been involved in trickle irrigation for a long time. Indeed, some of the investments have been of a very substantial and long-term nature. So I think it absolutely right and proper that the Environment Agency should have a concern for the impact of the new controls on those businesses. There is another point which I raised in Committee and should like to raise again. It is essential to take into account not only that trickle irrigation businesses often have considerable economic importance in the areas in which they operate and are therefore important for jobs, but that restrictions placed on their operations could well lead to increased imports from abroad. I have no doubt that the Environment Agency will wish to consider the impact that those imports might have on pollution and all the various additional costs and difficulties that go with it. So it is essential, as my noble friend said, for the Environment Agency to look very carefully at the impact that these abstraction licences will have on trickle irrigation. To my knowledge—the Minister may be able to correct me on this—the Environment Agency has not yet given any commitments to those involved in trickle irrigation and very little discussion has taken place. I therefore think that Amendment No. 15 is very reasonable; in fact I am not so sure that it could not have gone a stage or two further. I very much hope that the Government will accept it.

Lord Livsey of Talgarth: My Lords, this is indeed a fairly innocuous amendment. It merely states that,
	"the Agency shall have regard to the length of time such abstraction has been practised and the purposes to which it has been put". That seems a very reasonable proposal, should abstraction licensing be extended to such irrigation. Clearly it is necessary to have regard to the matters dealt with in this amendment.

Lord Whitty: My Lords, I am slightly confused about where we are on this. The noble Baroness, Lady Byford, moved Amendment No. 15, and the noble Lord, Lord Livsey, referred to the terms of Amendment No. 15, but some of the more general remarks about trickle irrigation seem to relate more to subsequent amendments which we have yet to reach. This part of the clause deals with transitional arrangements. The Environment Agency has made it clear that there will be a period of two years for licence applications to be made and that abstractions by existing operators, including trickle irrigation, will continue to be lawful during that period. Likewise, the Environment Agency would not be expected to issue licences to other people which would affect that traditional use of the water. Therefore, there would be a continuation of the period until the formal licence came into play.
	The question of a more general exemption for trickle irrigation comes later, in Amendment No. 17, I think. During that period when people are making applications, the continued viability of their businesses would be discussed. However, as trickle irrigators are above the threshold quantum of abstractors, they should be treated on a level playing field along with everyone else. I shall return to that argument later. However, the sudden withdrawal of access to trickle irrigation, which is covered by the area to which Amendment No. 15 applies, would be covered by that two-year transitional period. I think that we will be returning to the wider arguments.

Baroness Byford: My Lords, I did not think that there was any confusion. However, just in case there was, I was speaking to Amendment No. 15, which amends page 10, line 8 and provides that the agency,
	"shall have regard to the length of time such abstraction has been practised and the purposes to which it has been put". I hope that that is the amendment to which the noble Lord responded. I thank my noble friend Lord Peel for his contribution. Trickle irrigation is very important to horticulture and is a growing part of the community. I am delighted about that. If climate change continues, we will be able to produce many different types of vegetable and other crops. My noble friend referred to the pollution caused by transporting imported food, which I call food miles. There is a huge number of such miles. I am also grateful to the noble Lord, Lord Livsey, for his comments. However, I am not at all satisfied with the Minister's response. That is why I queried whether he was responding to the right amendment. I should therefore like to test the opinion of the House.

On Question, Whether the said amendment (No. 15) shall be agreed to?
	Their Lordships divided: Contents, 91; Not-Contents, 89.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 9 [Power to provide for further exemptions]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 16:
	Page 12, line 4, after "State" insert "shall make regulations when requested to by such statutory bodies as are concerned with water management or"

Baroness Miller of Chilthorne Domer: My Lords, Amendment No. 16 seeks to address some of the confusion that arises in this confused and confusing area of legislation. That confusion was illustrated by the laughter that erupted on all sides of the House when Amendment No. 13 was discussed.
	When we addressed the matter in Grand Committee, I sought to exempt from the provisions of the Bill the traditional method of irrigating fields at time of flood known as warping. Subsequent to reading the Minister's reply and having further discussion with various parties on the matter, I decided that the simplest way to deal with it at this stage—although I bear in mind my own feelings and those of the noble Baroness, Lady Byford, on increasing regulation—was to allow the Secretary of State to make further regulations with regard to exemptions.
	My amendment seeks to ensure that the Secretary of State will make regulations to increase the number of exemptions when he is requested to do so by statutory bodies concerned with mater management. I refer to such bodies as drainage boards involved with drawing up water level management agreements, flood defence committees and river basin management committees. I refer to the latter in the optimistic hope that a later amendment in my name will be accepted. Under the terms of my amendment any of those bodies could request the Secretary of State to make exemptions that applied to their part of the country. I believe that not all the exemptions that are necessary are covered by the Bill. Perhaps with one or two exceptions—I do not include myself among them—people do not have a firm grasp of all the implications of the matter that we are discussing. I have tried to phrase the amendment fairly widely to provide some latitude for the future. I beg to move.

Earl Russell: My Lords, I am happy to support my noble friend's amendment and I admire the effort she has put into trying to reach a compromise. I should like to make just one point. I speak as a member of the Joint Committee on Statutory Instruments. Will the Minister give an undertaking that any regulations made under the amendment, if it were accepted, would not be proceeded with if the Joint Committee was not convinced that they were intra vires?

Lord Dixon-Smith: My Lords, the principle of the amendment is in a sense unexceptionable in that if local knowledge and local information indicate that a situation can be resolved only by regulation, it is right that that should be requested. But we have to realise that any regulation, unless it is tightly defined, will presumably apply nationally. It might be difficult to draft regulations that would apply to only one specific instance. I am not sure whether the amendment is practical in detail. In principle, one would like to see it agreed to, but, from the point of view of drafting regulations that are national in their impact, it may be difficult.

Lord Whitty: My Lords, the noble Baroness has certainly widened the scope with the amendment, but has not left any latitude. The amendment would force the Secretary of State to make regulations when statutory bodies concerned with water management, which are not defined in the amendment, request them. Obviously, any statutory body would be listened to by the Secretary of State and the National Assembly, and any request would be taken seriously. That is understood.
	The Government always have to balance a range of considerations and interests to ensure fair treatment to all concerned. In that case, it would not be appropriate to give the bodies effectively the right to instruct the Secretary of State to make regulations removing exemptions. I was even more alarmed when the noble Baroness implied that a lot of the exemptions could be local and specific rather than general. The final decision on such requests must rest with the Secretary of State and the National Assembly, rather than undefined statutory bodies.
	I was asked about regulations under the clause. Clearly, they would be published for public consultation and consideration by Parliament in the normal way, including the Joint Committee. If that committee were to indicate that in its opinion they were ultra vires, as the noble Earl suggested, the Government and the House as a whole would have to take that extremely seriously. We would obviously take legal advice as well, as the committee no doubt would have done if it had issued a suggestion in those terms. That would be a very serious inhibition on proceeding with them. I hope that that goes far enough to assure the noble Earl on that point.

Baroness O'Cathain: My Lords, I want to ask the Minister for a point of clarification. Would it be helpful if the Secretary of State made regulations after consultation with statutory bodies? The statutory bodies concerned with water management could have some sort of locus in terms of consultation.

Lord Whitty: My Lords, there would always be such consultation. I think that the noble Baroness is seeking that statutory bodies have a right of initiative. They have that right; they have the right to suggest to the Secretary of State that she make regulations. However, the amendment suggests that statutory bodies shall require the Secretary of State to make regulations. That seems a step too far. They already have the right to make such representations.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his view on my amendment, and I note the contributions of the noble Baroness, Lady O'Cathain, and the noble Lord, Lord Dixon-Smith. I still have some fears that the Bill will not be sufficiently sensitive to some issues that I raised in Grand Committee about the management of particular areas but, by defining them locally rather than by the general behaviour of estuarine rivers or geological issues, perhaps the amendment is weakened.
	I fear that we shall find some cases in future that the Bill has not anticipated and so will not be dealt with in a satisfactory way. However, I guess that we cannot design a perfect world through the Bill. Given my inability to do so either, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 17:
	Page 12, line 11, at end insert—
	"( ) The Secretary of State shall make regulations providing for qualifying abstractions for the purpose of trickle irrigation to be classed as an exemption."

Baroness Byford: My Lords, we tabled the amendment again because, in Grand Committee, the Minister seemed reasonably in favour of the principle but felt that the amendment was in the wrong place. In bringing it back on Report, I am trying to get clarification on that. Many contributions in Committee acknowledged the fact that some trickle irrigators were small users of water, and some were large ones. On that there is no disagreement around the House. Therefore, in some circumstances, some trickle irrigators may need to be viewed in a stronger light than others. The intention of the amendment is to give the Secretary of State the responsibility of bringing forward regulations.
	I shall speak from the point of view of the NFU and on behalf of its colleagues involved in trickle irrigation. They seek a firm commitment from the Government and the Environment Agency to enter into early discussions with representatives of the industry as to how trickle irrigators might be brought into an abstraction regime, and to negotiate the nature of any transitional arrangements that will be introduced. Farmers and growers who use trickle irrigation are not opposed to the principle of bringing it within extraction regime licensing, but they have genuine concerns about the implications for their businesses and how the new controls will be implemented.
	As I said, many of the businesses are of high value and require the maximum possible time to make the necessary adjustments to accommodate the requirements of the new regulatory regime. The Minister has indicated that there will be a two-year period in which negotiations take place. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, we feel strongly that horticulture is an important class of occupation, and is to be regarded very seriously. That is why we supported Amendment No. 15, which stated that,
	"the Agency shall have regard to the length of time such abstraction has been practised".
	Then there were all the issues of food miles raised by the noble Baroness, Lady Byford.
	In terms of Amendment No. 17, however, I am slightly nervous about the number of different classes that we could be asked to regard as exemptions. Although I have enormous sympathy with those brought into the regime as trickle irrigators, I suspect that exemptions will begin to create an unfair playing field, not least those who have not held abstraction licences before and are applying for them for the first time. We explored in Grand Committee the scarcity of water throughout England, as exemplified by the map produced by the centre for national water demand.
	Although I sympathise with the purpose and spirit of the amendment, we would not want to support any group of users who fell over the threshold that requires a licence to be held in order to be classed as exemptions.

Lord Whitty: My Lords, in a sense, the noble Baroness, Lady Miller, has referred to my exact point. This amendment seeks to exempt a whole class of users, irrespective of the amount of water they use. One recognises the fact that we are bringing trickle irrigators into the scheme for the first time, but they are quite substantial users of water; indeed, some more so than others. Although in many cases trickle irrigation may be seen as quite an efficient use of water, that is not always the case. Recent reports tend to show that trickle is not always the most efficient system, especially if the system is not maintained—or, frankly, if it is left on by default—which, regrettably, does happen—because, unlike spray irrigation, you cannot see the water.
	I am not in favour of exempting whole classes of water users from what, in some respects, is quite a high threshold. Indeed, I am not sure that it is in any sense in the interests of horticulture. The maintenance of maximum availability and the efficient use of water for the horticulture industry, especially in the drier south and east of the country, are important considerations. One trickle irrigator could well abstract excess water and damage another trickle irrigator. Under the old exemption, cases arose where, for example, one trickle irrigator abstracted too much water from the system and that had an effect on another enterprise further downstream. In one case of which I am aware, such abstraction led to the bankruptcy of the other enterprise.
	I do not believe that there is a good justification for complete exemption of trickle irrigators. Indeed, if we were to exempt them in the intensive horticulture areas, one horticultural enterprise could seriously damage another. Therefore, I do not regard this provision as being an attack on the horticulture sector; it is a protection for them.

Baroness Byford: My Lords, I thank the Minister for his comments. I am also grateful to the noble Baroness, Lady Miller, for expressing her concerns in this regard in advance of this stage of the Bill. I take on board the fact that there are irrigators who use the system wisely, and others that do not use it so wisely. I understand the Minister's argument. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Farrington of Ribbleton: My Lords, I believe this to be a convenient moment for an adjournment of the proceedings. I beg to move that the Report stage be adjourned until after Starred Questions.

Moved accordingly, and, on Question, Motion agreed to.

Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 1.31 to 2 p.m. for Judicial Business and to 3 p.m. for Public Business.]

Unemployment

Lord Dormand of Easington: asked Her Majesty's Government:
	What is the present unemployment rate for (a) England, (b) the southern region and (c) the northern region.

Baroness Hollis of Heigham: My Lords, as my noble friend will know, we do not have a southern region or a northern region for statistical purposes so I do not have statistics on that basis. However, I have other figures that may be helpful. The current ILO unemployment rate for England is 5 per cent. Across the country it ranges from a low of 3.6 per cent in the South West to a high of 7.1 per cent in London. The North East's unemployment rate is currently 6.5 per cent.

Lord Dormand of Easington: My Lords, as my noble friend says, I am aware there are not specific southern and northern regions but she has given figures for those areas. Can she confirm that the figure for the northern region that she has just given is the highest of any region in the country and that that region has had the highest unemployment ever since figures were kept?
	Despite all that the Government have done for the region—and they have done a great deal—is it not obvious that the policies, as they stand at the moment, are not succeeding? Can my noble friend say whether new approaches to the problems are being made and, if so, what they are? Does my noble friend agree that, despite the well publicised failures in the region, like Siemens and Samsung, it is very important that in the present circumstances the smaller companies, of which there are dozens, should be retained? Are the Government considering that very important problem?

Baroness Hollis of Heigham: My Lords, I am delighted to be able to tell my noble friend that he is not right about his first statistic, which is good news. The region with the highest unemployment is London, particularly boroughs such as Tower Hamlets. However, the North East runs a close second. I am also happy to tell him that since 1992, when the unemployment figure for the North East was indeed the highest at over 12 per cent, that figure has now almost halved—down to the 6.5 per cent I gave in my first reply. The House will know—as my noble friend does—that some of the structural reasons for that long history of relatively high unemployment figures compared with the rest of England are associated with declining industries like coal and that coastal towns have also been badly hit.
	One of the difficulties is the demographic problem facing the North East. The region has, for example, the lowest employment of people over 50 of any region in the country; it has virtually the lowest employment rate for ethnic minorities of anywhere in the country; it has the lowest percentage of women in employment of anywhere in the country; it has the lowest number of self-employed of anywhere in the country. That is why government strategy is to seek to target help on those groups who wish to work and have potential for work. That help ranges from New Deal to Neighbourhood Renewal, to coalfield funds, to the Single Regeneration Budget and Working in Europe.

Lord Elliott of Morpeth: My Lords, does the Minister accept that the North East of England has always done its best to help itself? Does she appreciate that at present, thanks to the competitiveness of a section of our traditional industry, there is a very good chance of a considerable proportion of a contract for the building of a new aircraft carrier going to the north? If it does, that will be very good news for employment in the areas of Tyneside and Teesside.

Baroness Hollis of Heigham: My Lords, should that happen, I am sure we would all welcome it.

Earl Russell: My Lords, does the Minister agree that to understand unemployment we need to look at ward-sized pockets as well as at regions? In the light of that, can she tell the House the number of wards with more than 10 per cent adult male unemployment in the north, in London and in the south other than London?

Baroness Hollis of Heigham: My Lords, the noble Earl, Lord Russell, was kind enough to indicate that that was his concern, so I took the opportunity to acquire the figures for him. Figures are not available at ward level but only at local authority level. At local authority level there are no districts in the UK where male unemployment is above 10 per cent. I am sure he will be pleased about that. Currently, the highest figure is for Tower Hamlets at 9.8 per cent. Four of the local authorities with the worst unemployment records are in central London: Tower Hamlets, Hackney, Lambeth and Southwark. The others, Middlesborough, Liverpool, Derry, Birmingham, Kingston upon Hull, Manchester and so on, come down in descending order. It is a combination of inner city areas where ethnic minority populations, for all kinds of reasons, including discrimination, have reduced access to jobs, of declining industries, and of coastal towns. Those seem to be the areas in which male unemployment remains highest.

Lord Forsyth of Drumlean: My Lords, can the Minister tell the House the increase in unemployment figures in England she expects as a result of the Government's policy on pensions announced yesterday, which will add huge burdens to the cost of business, made necessary by the tax of £5 billion that the Government is exacting every day from pensioners?

Baroness Hollis of Heigham: My Lords, there may be fluctuating unemployment figures today for reasons of which your Lordships, being parliamentarians, will be aware. However, I do not expect employment to fluctuate as a result of our pensions strategy. I am delighted that the noble Lord has given me the opportunity to move on to pensions strategy. I am absolutely delighted that yesterday the House gave such a warm welcome, led by the noble Lords, Lord Higgins and Lord Oakeshott, to the Government's proposals to increase the security for pension saving, thus extending the coverage of pension protection and the opportunity for greater prosperity in people's older age.

Baroness Carnegy of Lour: My Lords, will the noble Baroness answer my noble friend's question about the unemployment she expects in England as a result of those measures?

Baroness Hollis of Heigham: My Lords, I have. I suggested none at all.

Lord Brooke of Alverthorpe: My Lords, does my noble friend agree that coping with problems of unemployment in the provinces has been aided in the past by transferring work from London and the South East to those areas? Does she agree that that former policy was successful? Is she prepared to try to persuade some of her ministerial colleagues that it is worth revisiting? Would that not only help the provincial parts of the country that need additional jobs, but also perhaps ease some of the burdens and pressures in London and the South East?

Baroness Hollis of Heigham: Yes, my Lords, I agree entirely. It is certainly the Government's strategy to relocate as far as possible those jobs, particularly in the Civil Service, which appropriately can move there. I believe that the House would recognise that much of the regeneration of the North West, in particular, has been aided by the relocation of government offices in that region.

MOSAIC Small Satellite Programme

Lord Jenkin of Roding: asked Her Majesty's Government:
	When government funds will be committed for their share in the MOSAIC small satellite programme, to match those committed by the two research councils involved.

Lord Sainsbury of Turville: My Lords, under the first round of the Micro Satellite Applications in Collaboration programme, known as MOSAIC, the Department of Trade and Industry is investing £15 million in partnership with industry. Those commitments cover three projects and run until 2005. Decisions on any further rounds of the MOSAIC programme will need to take account of evaluation of the first round projects and availability of funding in DTI.
	I understand that the Natural Environment Research Council and the Particle Physics and Astronomy Research Council are assessing a possible micro satellite project which they may propose for support if the DTI launches a second round of MOSAIC in due course.

Lord Jenkin of Roding: My Lords, was it always envisaged that the MOSAIC programme would have an annual programme of support for those micro satellite exercises? Does he recognise that the first round had little real science in it? Will the Minister further confirm that the first round began some three years ago, and that MOSAIC is the UK's only national space programme? I hope that he will recognise how frustrating it is, both for the research councils he mentioned and for the scientists involved, that they are still having to wait for news from the Government as to whether there will be a second round. That does not seem a very satisfactory way of proceeding.

Lord Sainsbury of Turville: My Lords, perhaps I may deal shortly with all five questions. The answer to the first is "no": it was never envisaged, and never stated, that this was an annual programme. It was always envisaged that the programme would run until 2005. We shall probably look at the matter again in 2004 and make an announcement then. Secondly, there were no science projects in the first round. It was about developing capability in micro-satellite programmes. At that point, none of the research councils put forward projects, or indeed had money to do so. Thirdly, the programme will run until 2005, rather than 2003. It is the only national space programme. The greater proportion of our funding goes through ESA, where it is very effectively spent. The research councils have not agreed, or peer reviewed, the Earthshine project, and they are working on the basis that no funding will be available until 2004–05.

Lord Tanlaw: My Lords, I declare an interest as chairman of the Astronomy and Space Environment Group. Will the MOSAIC satellite programme in any way interfere with radio-astronomy? A previous programme dealing with mobile phones—not a British one—was susceptible to interference of that kind. Will the Minister take this opportunity to congratulate Professor Colin Pillinger and the British team working on the Beagle 2 Mars lander project, which he did a great deal to get off the ground? We wish the lander well on its arrival on Mars. However, it was all a bit lastminute.com. Perhaps in future there will be more composite and planned space efforts which will be more exciting, and, it is to be hoped, as successful as this one will be.

Lord Sainsbury of Turville: My Lords, so far as I know, none of the three projects funded in the first round of MOSAIC will interfere with radio-astronomy. I will certainly pass on the views expressed about Colin Pillinger. I have been congratulating him fairly steadily for the past three months on what I think is a superb project. It is a high-risk project, but is a brilliant piece of British science and engineering. There was a great deal of difficulty in funding the programme, because it arose very late in the day—it was put forward at the last minute due to the failure of the Russian mission, at a time when all the money from government had already been committed. It was therefore extremely difficult, and we had to take a very entrepreneurial view towards funding it.

Baroness Sharp of Guildford: My Lords, will the Minister confirm that the MOSAIC programme is an integral part of the European Space Agency programme? Will he further confirm that the funding that is currently available will be sufficient to finance the Earthshine programme, which is aimed at measuring solar emissions and energy reflected back to the Earth—a project which is integral to our understanding of global warming?

Lord Sainsbury of Turville: My Lords, no—MOSAIC is an entirely British programme. It is not integral to the European programmes. As I said, we shall be considering in due course whether to fund a further round of MOSAIC projects. Only one of the satellites has been launched under the first group of programmes. We shall probably look at this matter again in 2004 and consider whether there should be another round and how much money we should put into it.

Baroness Miller of Hendon: My Lords, is the Minister aware that all member states participating in the work of the European Space Agency spend more, as a proportion of their subscription to the ESA, than does the United Kingdom? Will the Minister confirm that only Austria, Belgium, Ireland and Norway spend less money on these programmes than does the United Kingdom? If the facts are as I have stated, how are they compatible with the statement often made by the Government that they intend the United Kingdom to be the leader in scientific research and development?

Lord Sainsbury of Turville: My Lords, I believe that those facts are broadly correct. That situation resulted from a considerable run-down of our space programme during the period under the previous government. We have not yet been able to increase the amount that has gone into the programme. We avoid some of the rather costly mistakes that have been made by other governments. We do not invest in launchers or in the international space station. As regards value for money in terms of achieving scientific, commercial and environmental objectives—the three main objectives of our space programme—we are highly successful.

Lord Oxburgh: My Lords—

Lord Williams of Mostyn: My Lords, it is time for the noble Lord, Lord Tebbit, to put his Question.

Economic and Monetary Union

Lord Tebbit: asked Her Majesty's Government:
	Whether they will set out the constitutional question concerning entry into monetary union to which the Chancellor of the Exchequer alluded during his television interview with Sir David Frost on 18th May.

Lord McIntosh of Haringey: My Lords, as the Chancellor of the Exchequer set out in his Statement on EMU on 9th June:
	"The Government's view is that, if the economic case is clear and unambiguous, then the constitutional issue, while a factor in the decision, should not be a bar to entry".—[Official Report, Commons, 9/6/03; col. 408.]

Lord Tebbit: My Lords, is the Minister aware that, not for the first time in response to Questions from me on this subject, he has totally ignored the Question? The Question I asked was: what is the constitutional issue to which the Prime Minister as well as the Chancellor of the Exchequer have alluded? It is a constitutional issue which the Prime Minister says makes it necessary for us to have a referendum on the euro but not on the convention. What is it?

Lord McIntosh of Haringey: My Lords, the Prime Minister did not say that it was a constitutional issue which made it necessary for us to have a referendum on the euro. I have been looking back over the Answers that I have given to the noble Lord, Lord Tebbit, both in this Chamber and in writing. On 27th July 1999 I gave an Answer quoting remarks made by the Chancellor of Exchequer in October 1997, who said,
	"that to share a common monetary policy with other states does represent a major pooling of economic sovereignty".—[Official Report, 27/7/99; col. WA 173.]
	That is a constitutional issue.
	It is a fact that member states are not sovereign in areas where the Community has competence. This includes monetary policy aspects of EMU. But the pass was sold—if I may use that pejorative phrase—not in 1997 or in 2003, but when the United Kingdom joined the European Economic Community, at which time, without a referendum, it was recognised that member states are not sovereign in areas where the Community has competence.

Lord Taverne: My Lords, may I congratulate the noble Lord, Lord Tebbit, on finding a constitutional issue in the endless repetition of the mantra of the five tests which constituted the Chancellor's interview with David Frost on 18th May? Is not the real issue for the Government that further work on the euro should not be kept as a sacred preserve of the Treasury priesthood, which has been Euro-sceptic since the Common Market was founded, but should be much more open and a matter for the Government as a whole and the public as a whole?

Lord McIntosh of Haringey: My Lords, the Question on the Order Paper relates to the constitutional issue and what the Chancellor said to Sir David Frost on 18th May. I have looked up the transcript. What he actually said was:
	"The constitutional issue should not be a barrier to joining. That was a decision we made as a government in 1997".
	I think that answers the noble Lord, Lord Taverne, as well.

Lord Pearson of Rannoch: My Lords, when the Minister confesses to my noble friend Lord Tebbit that the pass of our parliamentary sovereignty was sold under the 1972 Act, how does he explain the letter that the Labour Prime Minister, Mr Harold Wilson, sent through every letterbox in the land in 1975, stating that no sovereignty was at stake, that the danger of monetary union had been removed for ever, and that what we were voting about was merely a common market?

Lord McIntosh of Haringey: My Lords, the only referendum—the only occasion on which this matter was put to the people of this country—was on the initiative of a Labour government and it followed re-negotiation of the treaty. That was a quite different matter from the original decision of a Conservative government to make this major constitutional change without a referendum.

Lord Pearson of Rannoch: My Lords, with the leave of the House—

Noble Lords: No! Shame!

Lord Williams of Mostyn: My Lords, I believe that the noble Lord, Lord Forsyth, was attempting to intervene.

Lord Forsyth of Drumlean: My Lords, if the Minister's Answer is taken at face value—in particular his reference to the constitutional issue lying in the pooling of economic sovereignty—and if the Prime Minister said that the referendum was necessary because there was a constitutional issue, why are we not to have a referendum on the constitutional convention and the proposals which will result in the pooling of sovereignty in a whole range of areas?

Lord McIntosh of Haringey: My Lords, it was specifically denied that the Prime Minister said we needed a referendum because of the constitutional issue. We have undertaken to consult the people of this country in a referendum on EMU because it is a matter of the most profound economic importance. There is no constitutional barrier, if indeed the evidence is clear and unambiguous that it is in our economic interest.

Lord Tebbit: My Lords, are we having a referendum on the euro because it is not a constitutional issue and being denied one on the convention because it is a constitutional issue?

Lord McIntosh of Haringey: My Lords, the Question on the Order Paper is not about the convention. I shall leave it to my noble friend Lady Symons to continue to respond, as effectively as she does, on this matter. But neither of the statements the noble Lord, Lord Tebbit, makes is true. Nothing has changed. We have been saying the same thing—I have been boring this House on the same subject using the same words for six years.

Earl Russell: My Lords, does the Minister agree that relations between political and economic power partake of the character of a seesaw? Does he further agree that a seesaw does not work when it is permanently down at one end? Does he therefore agree that the increasing concentration of economic power in large units creates a case for political power equally to be concentrated in large units, or else find it is unable to compete?

Lord McIntosh of Haringey: My Lords, that is a gross oversimplification of the relationship. The political and economic aspects of any issue are much more complicated than that of a children's playground.

Lord Howell of Guildford: My Lords, when the former Chancellor of Germany, the greatly respected Helmut Kohl, said repeatedly that monetary union will work only with full political union, was that also a gross oversimplification, or was he speaking the truth which the British people understand very well?

Lord McIntosh of Haringey: My Lords, I am not responsible for what the former Chancellor of Germany said.

Press Behaviour

Lord McNally: asked Her Majesty's Government:
	Whether they will reconsider their decision not to introduce legislation to outlaw behaviour by the press which undermines the judicial process.

Lord McIntosh of Haringey: My Lords, the Government see no reason to change their decision not to introduce legislation to outlaw payments to witnesses in criminal cases. We did not legislate because on 19th March this year the Press Complaints Commission strengthened its code of practice absolutely to ban payments to witnesses in active proceedings. It also for the first time prohibited payments when proceedings were likely and foreseeable, unless it could be demonstrated that they were in the public interest.
	However, the PCC and other media organisations are in no doubt that the Government will legislate should the strengthened code be abused. To our knowledge, there have been no payments to witnesses since 19th March.

Lord McNally: My Lords, is the Minister aware that opinion as diverse as that of the editor of the Guardian and Mr Andrew Neil has in the past week suggested that the Press Complaints Commission holds all the terror of a toothless poodle as regards the users of its code? Does he really believe that we shall see from the press the behaviour to which he has referred unless the PCC is audited and assessed by the Office of Communications to ensure that it is a proper regulator, properly transparent, properly independent and thus able to perform the duties expected of it?

Lord McIntosh of Haringey: My Lords, I have already rejected a suggestion that I should answer to this House for the statements of Helmut Kohl. I am particularly happy to say that I am not responsible to this House for the statements of Mr Alan Rusbridger and Mr Andrew Neil. But the noble Lord, Lord McNally, is quite at liberty to raise such matters at their appropriate place in the Communications Bill. I hope he will agree that the Government's view is clear in the Answer that I have given.

Lord Baker of Dorking: My Lords, does the Minister agree that the Press Complaints Commission has bark but no bite? As the Communications Bill is going through the House, will he consider giving the PCC the power to levy fines on those members of the press who do not follow the code? In matters of self-regulation, fines are accepted by the Government. The body Exodus, which regulates part of the telephony industry, has the right to issue fines and it has issued fines of £1 million. As Exodus has bite as well as bark, why should not the PCC have the same powers?

Lord McIntosh of Haringey: My Lords, perhaps the noble Lord, Lord Baker, has not been following the proceedings in the Courts Bill, which has left this House and is about to go into Committee in another place. Clause 93 of that Bill provides for the possibility of a third party court order in the case of serious misconduct. That is not yet in force. I do not know whether it would be applicable to particular cases recently before the courts, but the Government are enacting that legislation in order to give bite to the courts in pursuing serious misconduct.

Baroness Howe of Idlicote: My Lords, does the Minister agree that as regards payments to witnesses the regulation of the broadcast media is tougher than that of the print media? Does he further agree that that is not as it should be?

Lord McIntosh of Haringey: My Lords, again, it is possible to raise that matter in the context of the Communications Bill. There is a difference between broadcast media and print media. We have a free press; anyone can start a newspaper in this country—if they have enough money—and we preserve that free press very jealously indeed. One of the protectors of a free press is effective self-regulation.
	We have made it very clear to the Press Complaints Commission that if its strengthened code of conduct is not adhered to, we are prepared to undertake legislation. Broadcast media are regulated in a different way by licensing.

Lord Hoyle: My Lords, does my noble friend—

Lord Renton: My Lords, bearing in mind—

Lord Hoyle: My Lords, I believe that it is the turn of this side.

Lord Williams of Mostyn: My Lords, it is the turn of my noble friend Lord Hoyle.

Lord Hoyle: My Lords, does my noble friend agree that one of the problems is the composition of the Press Complaints Commission in that editors of newspapers are judging the actions of their colleagues? Should not the PCC be completely independent?

Lord McIntosh of Haringey: My Lords, there are lay-members on the Press Complaints Commission. My belief is that they are a majority of the members and the chairman is a distinguished layman.

Lord Renton: My Lords, bearing in mind that an extensive Criminal Justice Bill is coming before the House, with its Second Reading on Monday, would it not be wise for the Government during its Committee stage to put forward a fresh, enlarged definition of "contempt of court" so that the matters complained of by noble Lords can be dealt with?

Lord McIntosh of Haringey: My Lords, that is a matter for those who take part in debates on the Criminal Justice Bill. However, I should point out that the provision in Clause 93 of the Courts Bill, to which I referred, does not involve any extension of the provisions of the Contempt of Court Act 1981. Indeed, the prohibition on payments to witnesses in a case when proceedings are active is wholly compatible with the strict liability rule in the Contempt of Court Act 1981.

Lord McNally: My Lords, the Minister mentioned the freedom of the press. Does he accept that those of us critical of the performance of the Press Complaints Commission have just as much interest in seeing a free press as anyone else? Furthermore, did he notice the results of research from the University of Cardiff, showing that 10 per cent of the public believe what they read in our tabloid newspapers against 70 per cent who believe what they hear on broadcast news? Broadcast news has strict regulations about balance, truth and accuracy while the press does not. Does the Minister not believe that a press held in contempt by the general public is in danger of losing its freedom?

Lord McIntosh of Haringey: My Lords, I have never doubted, and would not think to doubt, the sincerity of those who take a different view from the Government on this matter. Clearly, there are different interpretations of the best way to achieve freedom of the press.
	I am not clear from the subsequent question of the noble Lord, Lord McNally, whether he takes the view that there should be an objective of impartiality on individual newspapers as there is on individual broadcast channels. To start to say that individual newspapers should be impartial is, as I think I said in proceedings on the Communications Bill, a wholly new view of the relationship between the Government and the press. I would suggest that it is a much more interventionist view and one which puts at risk the freedom of the press in this country. I hold that view as sincerely as the noble Lord, Lord McNally, holds his views.

Mental Incapacity

Lord Williams of Mostyn: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
	Moved, That it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on any draft Mental Incapacity Bill presented to both Houses by a Minister of the Crown, and that the Committee should report on the draft Bill by the end of October 2003.—(Lord Williams of Mostyn.)
	On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Civil Contingencies

Lord Williams of Mostyn: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
	Moved, That it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on any draft Civil Contingencies Bill presented to both Houses by a Minister of the Crown, and that the Committee should report on the draft Bill by the end of October 2003.—(Lord Williams of Mostyn.)
	On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Congo

Lord Bach: My Lords, with the leave of the House, I shall now repeat a Statement made this afternoon in another place by my right honourable friend the Minister for the Armed Forces.
	"With permission, Mr Deputy Speaker, I would like to make a Statement on a British contribution to a multinational force for the Democratic Republic of Congo. I would also advise the House that my right honourable friend the Secretary of State for Defence is attending a NATO Defence Ministers' meeting in Brussels, which is why he is unable to be present for this Statement.
	"The House will be aware of the serious situation in the Ituri province in the Democratic Republic of Congo, particularly in and around the town of Bunia. There has been a resurgence of fighting, particularlybetween Hema and Lendu militia, and tens of thousands of people have fled from their homes.
	"Some of these are in refugee camps around Bunia, others are scattered in the surrounding countryside. There is a risk that renewed violence and disease could lead to many deaths.
	"The UK is wholly committed to supporting the United Nations peacekeeping effort in the Democratic Republic of Congo. In Ituri province and elsewhere good work has been done. But United Nations troops are faced with a new situation with which they do not have the numbers to deal.
	"Recognising this, United Nations Secretary-General Kofi Annan requested the creation of a multinational force to stabilise Bunia. UN Security Council Resolution 1484, passed on 30th May, provides the mandate for the force and on 5th June, the EU decided that the operation would be under European defence and security policy auspices.
	"As framework nation, France will provide the military commander and the majority of the force. A number of EU member states and non-EU nations are also likely to contribute. We expect the EU Council of Ministers to agree today formally to launch the operation—the first EU-led operation outside Europe.
	"I can now tell the House how the United Kingdom intends to contribute to this EU-led force. We have offered to provide an engineer detachment and Hercules transport aircraft to help deploy the multinational force. The exact numbers of personnel needed will not be known until we have completed further detailed analysis of the engineering tasks required in Bunia.
	"Bearing in mind the importance of co-ordination between the United Nations and the multinational force and to assist with planning, we will also provide five staff officers to the force headquarters and a liaison officer to work with the United Nations.
	"I know that many right honourable and honourable Members are concerned that our Armed Forces have too many commitments. I understand that concern. But I can assure the House that this is a modest, realistic and sustainable deployment.
	"But in making this commitment, we are clear that there can be no military solution to the problems in the region. The multinational force is an interim measure, deployed to help the United Nations with a limited and short-term mandate and will begin to withdraw when UN reinforcements arrive later in the summer.
	"We hope that this force will help stabilise Ituri province. We hope that it will assist the wider discussions in Kinshasa on the establishment of a transitional national government. We call on all parties in Ituri, Kinshasa and the surrounding region to play a full part in achieving peace and stability in the region.
	"I am pleased that the EU has responded quickly and decisively to the situation in Bunia. It is exactly how we envisaged the EU's security and defence policy developing as the practical expression of the common foreign and security policy.
	"The United Kingdom takes its commitments to global security seriously. This operation fits into our own objectives in the region, including support for the peace process in the Democratic Republic of Congo. I trust the House will recognise that through this contribution we are taking practical steps to help resolve a difficult situation. I commend it to the House".
	My Lords, that concludes the Statement.

Lord Vivian: My Lords, I am most grateful to the Minister for repeating the Statement from another place. We support intervention by the international community in order to stem the bloodshed and bring peace to this most destabilised area. However, why has it been decided to involve the United Kingdom now when we already have so many international commitments and all our troops are in desperate need of rest and further training?
	The force will consist, as we have heard, of an engineer detachment, six staff officers and Hercules transport aircraft. The Statement says that the exact numbers of personnel needed is not yet known, but surely the Ministry of Defence must have some planning figure in mind. It would be helpful to have been told that today.
	Realistically, will this small number of personnel make any difference? What will it achieve? Surely, there are other countries that could send a similar force. Instead, once again, our tired Army is called upon, leading to yet more separation for the families. It is the Royal Engineers who will be deployed, a corps which has already suffered an inordinate amount of separation recently, and their families are fed up with it. All countries within Europe have military engineers and staff officers; why could they not be used for this operation?
	This deployment raises many questions about the assurances given to Parliament as to how NATO would always be given first refusal in relation to military operations, and, in addition, would always have a role in planning EU operations. We should make no mistake: this is an EU-led military operation, small but complex, which will put our servicemen's lives once again at risk. Given the Government's commitment to NATO, and its proven and tested abilities to plan and command operations of this kind, why did we not discuss the matter with NATO and press it to lead the operation? An untried and untested EU operation of a complex nature is clearly more risky. Further, it would appear that the EU is acting unilaterally in this case.
	Perhaps it is worth drawing to your Lordships' attention a report of a French military briefing paper. It described this operation as,
	"politically and militarily high risk, very sensitive and complex",
	and reported that the current deployment of some 1,400 troops will have negligible impact on the tribal conflict.
	Will the Minister say what is the military mission for this force and under whose command the British contingent will serve? What are the benchmarks for success and what are the major risks? Does he agree that a token force of some 1,400 troops will make little impact in a country the size of Europe? How can the force be protected? What humanitarian aid will be available? Finally, what are the provisions for reinforcement and what are the means for extracting the force in an emergency?

Lord Redesdale: My Lords, I, too, welcome the Statement. However, in a different vein from the noble Lord, Lord Vivian, I do not believe that NATO would look at the operation and would be surprised if the Americans have even considered committing their forces to Africa. This is a humanitarian disaster that needs prompt action. It is to be welcomed that this is the first EU-led operation outside Europe. On that basis, it would be almost unacceptable for British forces not to be involved in such an operation, even on such a small scale.
	The numbers should be put in context. A small force is being sent out, but the case of Sierra Leone shows how a few British troops can make a significant difference.
	One of our areas of concern is that the operation is moving between the two areas of peacekeeping and peacemaking. It seems that, in a tribal conflict, which is so anarchic, it will be very difficult to stick to an envisaged time frame. However, I am sure that the Bangladeshi troops that will make up the next UN contingent will do their best to bring the situation under control. It should be remembered that the Bangladeshi troops did remarkable work in Sierra Leone. Their professionalism is to be noted.
	We welcome this decision. We understand the associated risks and dangers. Many Members of this House have often talked about the need for intervention in Africa, especially in the Great Lakes region, therefore it would be unacceptable for us not to take part. I do not believe that it will be a short-term commitment; however, it is one that we must make.

Lord Bach: I am grateful to both noble Lords for their remarks and, in particular, their support for the Government's stance in what has not been an easy decision, given all the circumstances. We are convinced that we are right to do what we are doing.
	The noble Lord, Lord Vivian, asked a number of questions and made several comments. He asked the reasonable question whether we could be more precise about numbers at this stage. Our current plans are for up to one Royal Engineers squadron. The noble Lord will know that that implies up to 100 men, but it could be fewer than that. The noble Lord will also know, better than I, from his experience, that neither the Government nor I want to be held to that precise figure. I am trying to help the House as best I can.
	The noble Lord also asked what the mission was. I can do no better than to answer by quoting from Security Council Resolution 1484, which I referred to in the Statement. It authorises,
	"the deployment until 1 September 2003"—
	the date is important—
	"of an Interim Emergency Multinational Force in Bunia in close coordination with MONUC, in particular its contingent currently deployed in the town, to contribute to the stabilization of the security conditions and the improvement of the humanitarian situation in Bunia, to ensure the protection of the airport, the internally displaced persons in the camps in Bunia and, if the situation requires it, to contribute to the safety of the civilian population, United Nations personnel and the humanitarian presence in the town".
	That seems to answer the question about the mission.
	The noble Lord asked, fairly, why this was not a NATO-led operation. The noble Lord, Lord Redesdale, dealt well, if I may say so, with that point. NATO, if it had wished, could have taken on the operation. That did not happen. The ESDP enables the European Union to plan, and, where NATO as a whole is not engaged, conduct crisis-management operations. NATO as a whole is not engaged in the DRC, nor need it be. It has never been envisaged that NATO has refusal over national or ESDP operations.
	The noble Lord, Lord Redesdale, made a good point about the dangers involved in this enterprise. He will know that the United Nations has asked for the force to be set up under Chapter VII. That means that the rules of engagement will be more robust than the existing Chapter VI rules under which MONUC operates at present.
	I would have hoped that the reason why the United Kingdom is taking part would be clear to this House and the country. Our Armed Forces are among the very best in the world and have demonstrated that they can undertake a wide variety of commitments anywhere in the world. Our extensive peacekeeping operational experience means that our Armed Forces will be able to make a unique and highly positive contribution to the force.
	The noble Lord, Lord Vivian, is right that we have asked a huge amount of our Armed Forces and their families recently. We acknowledge and accept that. But we would not be sending even this small force if we did not think that it was manageable.

Lord Craig of Radley: My Lords, bearing in mind that this is as yet a small force, what costs are likely to be involved and where will those costs fall? Will they be found from the Ministry of Defence's budget or will additional resources be made available to it?

Lord Bach: My Lords, the overall cost of the contribution remains to be finally determined. All United Kingdom costs will be borne by the cross-departmental African conflict prevention fund. The UK, with other member states, will contribute to the costs of the deployed multinational force headquarters and what is described as common use infrastructure. We believe that that cost will be around £800,000 to £900,000. I hope that that answers the noble and gallant Lord's question.

Lord Biffen: My Lords, the force being dispatched is relatively small in number. But, matched against the savagery of the conflict in the Democratic Republic of Congo, it clearly indicates that we may be at the beginning of an increasingly difficult and fraught process. In those circumstances, I should like to enquire further about the rules of engagement. I realise that, naturally enough, there is reticence about discussing the rules of engagement. The Minister has indicated that one United Nations chapter has been chosen over another. Who will authorise the rules of engagement for the British forces? Can the Minister give us a little more assurance on that point in view of the base savagery of the conflict that is now developing?

Lord Bach: My Lords, the noble Lord is right. It is a dangerous situation in which we are sending our troops. But there will be troops from other countries there, too. I remind the House that the MONUC UN force is already in the Democratic Republic of Congo, and some of those troops are already in Ituri province. The numbers referred to in the Statement will be added to them.
	I cannot say much more about the rules of engagement, save that it will be UK Ministers, on advice, who will set them out in detail. The rules of engagement will relate to Chapter VII rather than Chapter VI. I hope that it is some comfort to him, at least, that that means that they are a good deal more robust. Of course the protection of our own forces is paramount.

Lord Lea of Crondall: My Lords, is my noble friend aware that many of us breathed a great sigh of relief when we read that the EU force would be going to the eastern Congo? On the question of protocol, in this tragic situation, there is no more reason why it should be prima facie necessary for it to be a NATO force than it would be if Americans troops were doing something analogous in Guatemala or Colombia. Does my noble friend not agree that, given the extreme savagery in the eastern Congo—I echo the sentiments of the noble Lord, Lord Biffen—as the Prime Minister said a couple of years ago, we now have no alternative but to be involved in Europe? We cannot stand by on the other side of the road. So the rules of engagement are stronger than those of the UN, are they not? We will not allow ourselves to be in a situation such as Srebrenica. As the noble Lord, Lord Redesdale, implied, this engagement will probably have to continue and we cannot on 1st September allow the Bangladeshis to enter only on the previous rules of engagement under an earlier chapter of the United Nations charter.
	Finally, will my noble friend confirm that the whole of Europe—here, I agree with the noble Lord, Lord Vivian—must pull its weight in such operations because given the way in which the world is developing there will be many more such operations?

Lord Bach: My Lords, my noble friend will forgive me if I do not go down the road of comparing a NATO with an EU force. Both have their place. What we are doing is in absolute accordance with what has always been said about ESDP. What really matters is that the UN mandate comes from the UN to ensure that the international community will do something to relieve the situation in central Africa to help lead to a peaceful solution. Much good work has been done politically during the past months and years to try to restore the Democratic Republic of Congo to a better state. The important thing is that the force is sent in to try to contribute to that.

Lord Kilclooney: My Lords, the Minister stressed that this is a European Union force. Other than France and the United Kingdom, what real contribution has been made by each of the other 13 member nations of the European Union?

Lord Bach: My Lords, it is too early to answer the noble Lord accurately—or at all. What is important is that other countries who are not members of the European Union may well also contribute to the force. It is not limited to EU members. Those who are willing to help in one way or another will be extremely welcome, from wherever they come.

Lord Judd: My Lords, does my noble friend accept that many of us are sad that, so frequently in recent years, we have regretted mass killing and genocide after it has happened and wished that effective action had been taken in time, and that analysis has often demonstrated that a relatively small intervention can have disproportionately positive results? Does he further accept that many of us will be wishing British servicemen and women involved all success? We shall be thinking of them and their families during a difficult and demanding assignment.
	However, can he assure the House about one point? He emphasised that there is a United Nations mandate and that this is a European Union first effort, in terms of a European Union-led force. He has also spoken of the need for liaison with the United Nations. Can he make it absolutely clear that that is not only a United Nations mandate but that accountability remains to the Security Council, not to the European Union, for what is being undertaken and achieved?

Lord Bach: My Lords, I am grateful to my noble friend for his keen support of what we are doing. Of course this is a United Nations mandate and of course the United Nations will be ultimately responsible for ensuring that the mandate is carried out satisfactorily. The United Kingdom and other member states will exercise their political direction and strategic control, not from Paris, but from the EU Political and Security Committee, which consists of ambassadors from each of the member states. The operation commander will be answerable to that EU committee.

Baroness Park of Monmouth: My Lords, I have experience of how these things work for the UN in the Congo. I should like to get something clear. The Minister has reassured me by saying that, although the operational headquarters will be in Paris, the decisions will be made in Brussels, in the committee. However, I noticed that it is the Council of the EU that will authorise the rules of engagement. That is my first question.
	My second question concerns the chain of command. Generally speaking, when things happen in a crisis such as the Congo, decisions need to be made. We cannot run a war by committee. In the past, if people rang up the UN after five o'clock in the evening, they were not answered. So it is necessary to know exactly where responsibility lies. The United Nations document states that they will be reporting to the Secretary General. This document says that they will be reporting to the EU. When it is an operational decision, where do commanders go?

Lord Bach: My Lords, I acknowledge the great experience of the noble Baroness in this troubled field over many years. I shall do my best to answer. On rules of engagement, as I understand it and am advised, British Ministers will in the end decide under what rules of engagement British soldiers behave. On the chain of command, it is right to say that there will be a French commander of the operation. It is suggested that, on the ground, there will be a British lieutenant-colonel in charge of the engineers to whom I referred, with a French brigadier above him.
	As to where decisions will be made, the political decisions will be made in Brussels; the operational decisions will be made in Paris. But it is important to note that we shall also have British Army officers in Paris to advise and assist in the operational field.

Lord Mackie of Benshie: My Lords, can the Minister tell us more about Chapter VII? I understand that he prefers it to Chapter VI. Does it mean that the commander on the spot can, when appalling situations arise, take the decision to act with force?

Lord Bach: My Lords, I want to be cautious in what I say about that aspect. Chapter VII is much more concerned with peace enforcement than the rather less robust peacekeeping that applies under Chapter VI. I have no doubt that the commander on the ground will, when it comes to it, take the decisions necessary to allow those serving under him to protect themselves in the best way. The answer to the noble Lord's question is yes.

Viscount Slim: My Lords, the Minister may find it odd that I should question the number of the Royal Engineers. To say that it will be 100, even with up-to-date equipment and the versatility of the engineers, is not an accurate figure. In the Congo, at least a percentage of those engineers will have to be guarding those who are working when we get down to the basic practicalities. So 100 engineers will not be working on the many tasks.
	The Minister may be surprised to hear me say this, but we require more engineers. That should be carefully considered. From the question posed by the noble Baroness, I sense that there are quite a lot of chiefs who are fairly well spaced out. Will they talk to each other after five o'clock or when the sun goes down? I should carefully consider the first operation of the European Union command structure because it affects the lives, security and safety of our troops.
	The Minister may not agree with me, but I get a whiff that that is definitely a little cook-up between the President of France and the Prime Minister to make friends again. However serious the work required in the Congo—I agree with noble Lords who spoke for it—one wants to be clear about the political and operational aims. It is a tricky part of Africa, and I have some experience of it.

Lord Bach: I pay tribute to the noble Viscount's experience, but I must disagree with him when he suggests that there is a whiff of a cook-up between the leaders of Britain and France in order to make friends. There must be easier ways of making friends than by sending troops to the Democratic Republic of Congo. We have always been friends with France. We disagreed fundamentally with the attitude the French took a few months ago on Iraq in the same way as we disagreed fundamentally even with certain Members of the House who took a different view, but we are still friends with them. The relationship between Britain and France is complex and long-standing, but it is a relationship of friends and allies. I hope that the noble Viscount will not maintain that it is some kind of cook-up.
	We are doing this because we think that it is the right thing to do. The noble Viscount is right to point out that there are dangers inherent in it, as there are in any military matters. He will know that well. The EU force has already shown in Macedonia that it can operate sensibly and properly. The noble Viscount will know that too.

Lord Blaker: My Lords, I understood the Minister to say that the terms of engagement for the British troops who will be part of the force are a matter for British Ministers to decide. However, there will be forces there from several nations. Will the terms of engagement for each be a matter for their own government? If so, will there not be many different terms of engagement? Is that really being contemplated?

Lord Bach: My Lords, it is a Chapter VII operation, which gives a good clue as to what the rules of engagement will be for all those who are sent out, from whatever country. In the ultimate analysis, it will be for British Ministers to decide what the detailed rules of engagement should be for British troops. I do not think that, in the end, there will be much difference between the rules of engagement that apply for British troops and those that apply to those from other countries.

Lord Hardy of Wath: My Lords, would it not be unthinkable for the Government—or any other British government—to refuse such a request from the United Nations? Does my noble friend accept that there is anxiety among those of us who watched Europe call for military action in the former Yugoslavia and then refrain from finding soldiers with the combat capacity to effect those political wishes?
	Will my noble friend, when it is convenient, provide a list of the numbers of personnel provided by each EU member state? We could assess whether the member states that have called so vigorously for the second pillar, while providing little capacity to give meaning to it, have been as good at bearing the load as they have been at looking for the loot?

Lord Bach: My Lords, with regard to whether we would have no hesitation in reacting to such a request, I must caution my noble friend. We looked carefully to see whether it was appropriate for us to assist in this way. We rightly decided that we would do so.
	If my noble friend is saying that the military capabilities of members of the EU are not what they ought to be and that several countries should make greater efforts to make sure that those capabilities come up to scratch, I would agree wholeheartedly. The two countries that, perhaps, have the best capability and spend the money necessary to obtain it are the United Kingdom and France.

Lord Monro of Langholm: My Lords, can the Minister say more about the Royal Air Force commitment in this important operation? I think he mentioned a figure of 30 aircraft. Can he say how many personnel will be required to service the aircraft? Who will be responsible for their safety on the ground in the Congo?

Lord Bach: My Lords, I hope that I did not say 30 aircraft. I would have been misleading the House if I had. A number of CJ-130 transport aircraft will be used—not 30. They will be properly manned, but there will not be as many as 30.

The Earl of Sandwich: My Lords, I strongly support the intervention. In fact, I would like to see a larger intervention by the European Union to back up what is already going on in the peace process, which the noble Lord mentioned. Can the Minister confirm that the African forces—mainly Ugandan and Rwandan—that have been in the region will still be onside and will commit their own forces in the future? We should bear it in mind that the neighbouring Kivu region is also unstable.

Lord Bach: My Lords, I know that the noble Earl has huge experience and knowledge of that part of Africa. The political situation in the Democratic Republic of Congo and in the neighbouring countries is among the most complicated I have come across in my brief time at the Dispatch Box.
	We expect that all other countries in the Great Lakes area will behave with responsibility and good sense in assisting the Democratic Republic of Congo to achieve successful government as soon as possible. That, of course, includes the two countries to which the noble Earl referred. In that regard I know that my noble friend the Secretary of State for International Development spoke this morning to the president of Rwanda about these matters.

Water Bill [HL]

Consideration of amendments on Report resumed.
	Clause 10 [Orders under section 33 of the WRA, etc]:

Lord Dixon-Smith: moved Amendment No. 18:
	Page 13, line 33, leave out from "section" to end of line 34.

Lord Dixon-Smith: My Lords, in moving Amendment No. 18, I shall speak also to Amendment No. 20.
	In Committee, the noble Baroness, Lady Farrington of Ribbleton, said of the amendment:
	"We welcome the way in which the amendment deals with issues that we would like to consider . . . We shall take the amendment away and look at it".—[Official Report, 1/4/03; col. GC 118.]
	We tabled this amendment to see what that consideration was. It may be that Amendment No. 19 was the result of that consultation. If that is the case, I will wait for the Minister's reply before I say anything about it, as it is also in the group.
	Amendment No. 20 relates to a cause of some puzzlement to us. In Committee, the Minister seemed to suggest that the combination of subsections (5), (6) and (7) in some way allowed flexibility in setting abstraction limits. That is not our reading of the Bill. Subsection (5) appears to say that the Bill may be used to revoke exceptions in exactly the same way as under Section 27A(1) of the Water Resources Act 1991, except in situations covered by subsection (6) of this Bill. Subsection (6) says that changes to the exception quantities may only be greater than 20 cubic metres. That is one interpretation. Have we misread it? Does it mean that orders to be revoked may be only for amounts greater than 20 cubic metres? Subsection (7) appears to state that having set things up under subsection (5) above, Section 27A(1) of the Water Resources Act may be used to overturn the whole lot. This is something of a roundabout and we should like to have it clarified. That is why we have tabled the amendment. I beg to move.

Lord Whitty: My Lords, Amendment No. 19, standing in my name in this group, is an attempt to meet the points raised by the noble Duke, the Duke of Montrose, when he moved his amendment in Committee. My amendment attempts to have the same effect of allowing a more flexible approach to the removal of exception orders in so far as they relate to underground strata. I therefore hope that we can focus on my amendment. I think that I can partly clarify the matter, but I am starting at the other end of logic from that of the noble Lord.
	In essence, Clause 10 provides for an order to be made that revokes existing exemption orders made under Section 33 of the Water Resources Act. Those exemption orders currently disapply the licensing system to defined sources of supply. Revoking an exemption order will introduce the licensing system to the previously exempted source and the standard threshold of 20 cubic metres per day for licence control. If that threshold is considered too low for the source concerned, the revoking order can simultaneously substitute a higher one.
	Once the original exemption order has itself been revoked by the order under this clause, there is no further opportunity to use the powers of this clause as there is no longer an exemption order to revoke. So any further change to the exemption order could then be made only under the new arrangements provided for in this new Section 27A being introduced by Clause 6. The amendment seeks to enable a subsequent variation of the threshold to be made under Clause 10, but that would not work—for the consequential logic which I hope that I have explained.
	It says in my brief, "With this clarification"—

Noble Lords: Oh!

Lord Whitty: My Lords, I hope that the logic of that explanation is followed by the noble Lord. However, there is a further complication in relation to Clause 10. We may need to bring forward further amendments to apply the provisions of the Water Resources Act to this clause, and possibly other clauses, in order to ensure that the whole sequence of events ties together. If the noble Lord would like that in writing before Third Reading, I think it might be appropriate for us all.

Lord Dixon-Smith: My Lords, it seems to me that the logic is about as clear as the route through the Hampton Court maze. Once again, we seem to have provoked some perhaps what in time will be useful thinking and re-thinking about exactly what is going on here. A written explanation would certainly help before Third Reading. Obviously, if the Government are to bring forward further amendments in order to clarify the situation, my noble friend the Duke of Montrose, in moving his original amendment, has served the House well. We shall now obtain some real clarification which we do not appear to have achieved quite yet. But I am most grateful to the Minister for his reply. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty: moved Amendment No. 19:
	Page 13, line 34, at end insert "or any other way"

Lord Whitty: My Lords, despite the fact that we have not yet obtained total clarity, it would be better to insert this amendment. Thus, the subsequent correspondence can relate to the text as at least partially moved in the direction I think we all want. I beg to move.

On Question, amendment agreed to.
	[Amendment No. 20 not moved.]
	Clause 15 [General consideration of licence applications]:

Lord Dixon-Smith: moved Amendment No. 21:
	Page 19, line 26, at end insert—
	"( ) In subsection (3), after paragraph (b) there is inserted—
	"(c) the probable funding period required to finance the construction of engineering facilities necessary to the supply, storage or processing of the water that is the subject of the licence applied for"."

Lord Dixon-Smith: My Lords, Amendment No. 21 is an innocuous little amendment which I hope that the Government might consider favourably. I say that it is innocuous, but we tabled a fairly innocent amendment for Grand Committee to consider and we had very robust debate on the subject. The Government thought that perhaps the amendment was too forcing. This amendment certainly is not—or is less forcing anyway.
	I have a problem with what I would term the psychology of this Bill. Anyone who might read this Bill in an attempt to find out what the rationale is behind the licensing process for the abstraction of water would come across the regime set out on the face of the Bill, which gives the clear impression that water abstraction licences would last for 12 years and could then cease. That is what appears in the Bill. Those of us who have had the joy of sitting through Grand Committee and are participating today know that that is not the true situation. If one delves through all the previous legislation and the explanations thereof and takes the trouble to read Hansard, we know that licences might be granted for longer periods.
	Consider the position of, for example, a banker who has to consider the funding of a major water project. What will he do? He will look at this Bill—that is, the latest legislation that deals with the subject. We all know that investment in the water industry is on the whole large-scale, long-term and long-life. Investment periods will match that. One has only to consider large reservoirs, as we were this morning: many of the main reservoirs that supply this country's water were built more than one century ago. One has only to consider water mains: the London ring main was recently installed, but I am sure that it is hoped that it will have a life at least as great as that of the London sewers which were installed 150 years ago. Consider even more local mains or supply pipes to houses: the old one inch gas and water connections installed 100 years ago are still going strong. Drains and sewers, of course, are the same, although they are not directly related.
	My point is that all of these things, and housing, too, are long-life projects and have long funding periods. Therefore, it would be perfectly reasonable for them to be funded over a similarly long period. But that banker, looking at the latest legislation, would say, "Hey, I have no security in the continuity of use of this particular asset. It could lose its useful life after 12 years because the licence might be withdrawn". As I have said, we know that that is not the case, and after diligent research the banker may find that out. Furthermore, the applicant for the investment funding would no doubt make the reality perfectly plain. However, it would be so much simpler if something giving a hint of the real position was included on the face of the Bill.
	So we come back to my innocuous little amendment. It simply requires that,
	"the probable funding period required to finance the construction of engineering facilities necessary to the supply, storage or processing of the water that is the subject of the licence applied for",
	be a matter that is taken into account in the granting of the licence. I would not say that the phrase is strong enough, but I propose it on the basis that we are asking the Government to accept a form of words in an area where they have proved reluctant to acknowledge, on the face of the Bill, that there is a problem. I beg to move.

Lord Borrie: My Lords, the noble Lord, Lord Dixon-Smith, has spoken to his amendment with reason and moderation. He alluded to a problem which was discussed at some length in Grand Committee. It is one of two or three amendments on a similar matter, one of which we shall come to shortly dealing with a presumption of renewal of licences. The difficulty indicated by the noble Lord was well exemplified by his reference to a banker considering the matter. Although the hidden meaning of the Bill—when he reads Hansard and takes into account ministerial assurances, guidance, what is said by the Environment Agency and so forth—may assist the banker in coming to the view that the licence will be available for a longer period, on the face of it the capital expenditure which the banker may be asked for will not be recovered for a much longer period than, say, 12 years.
	However, it is not just the banker and the water company who will be concerned about getting their money back. Who is the beneficiary of the infrastructure and capital expenditure here? It is the consumer, in particular the consumer of the future, who, we all know, needs an adequate supply of water. Consumers need it not only today; they need a firm assurance for the future. At the moment I share the view of the noble Lord, Lord Dixon-Smith, that the Government have been hesitant about this. Readers of the Bill and later the Act will be concerned that there is not enough clarity as regards how long the licences will last or whether there is a presumption of renewal. Therefore water companies will hesitate to put down money and the consumer may be left uncertain about his future supplies of water. For those reasons I share the doubts that have been expressed. I agree with the thinking behind this amendment and the similar amendments to be discussed shortly.

Lord Sutherland of Houndwood: My Lords, I support this amendment, which overlaps with an amendment I shall move later. The presumption that, ultimately, the Bill must serve both suppliers and consumers and create the stability necessary for the relationship to last over the coming decades—not simply years—is a good presumption to put on the face of the Bill. For that reason, I support the amendment.

Baroness O'Cathain: My Lords, although I have already intervened in the debate, I have not yet declared my interest as a director of a water company. I did not think it necessary to do so when I was speaking on more general points. I strongly support my noble friend in his amendment. The reality is that the investment required in facilities for the supply and treatment of water is such that it can be approached in two ways. It can be done in the good old World War Two manner of "make do and mend", or it can be done by ensuring that the investment will last for generations to come.
	When water supplies first became widespread in the United Kingdom, as we all know from the Victorian pipework still in place, it was done on the basis of a very robust investment intended to last for ages. If companies are given no guarantee that they will be able to recoup their investment, they have two ways of approaching it. As I said, one is the policy of make do and mend, which not for one moment do I think any sane water company would choose. The other approach is to load the current customer with the cost of the investment because the payback period would then be much shorter than it would have been if there was a presumption that the licence would be renewed or a reasonable time-scale for the payback could be guaranteed.
	The present provisions could result in a short-sighted way of dealing with these serious issues. Given the long-term nature of this business investment, it should be noted that no other industry with long-term investment interests has a threat hanging over it that the whole operation could grind to a halt on the suspension of a licence. I support my noble friend's amendment.

Baroness Miller of Chilthorne Domer: My Lords, the noble Lord, Lord Dixon-Smith, and I have had a common interest in most of the amendments moved so far, so I am particularly sorry to have to tell him that, on this amendment, I cannot support him.
	I take the point just made by the noble Baroness, Lady O'Cathain, but we can look at the reverse of that coin and point out that, in many ways, the investment for a water company is safer than that faced by many businesses, whether they be in retail or manufacturing. I say that because, with the exception of the duration of the licence, the water company operates in a virtual monopoly position.
	I accept the worries expressed about the renewal of licences, but after debating these matters in Grand Committee and listening to the reasoning behind how the Environment Agency is to regard the renewal of licences, I feel that the assurances we were given are satisfactory. So I am not in favour of giving any further assurance here when half of the thrust of the Bill is to assure the future balance between the needs of the environment, investment and social need. In that regard, the Bill has struck the right balance already.

Lord Whitty: My Lords, I am not sure whether this amendment is innocuous or if it would be effective in achieving what the noble Lord seeks. It would require the Environment Agency, in addition to its other duties in determining a licence application, to have specific regard to the funding period for any engineering, storage or processing facilities.
	If the amendment aims to ensure that the time limit of the licence is linked to such considerations, then it would not achieve that aim. The intervention of the noble Lord, Lord Sutherland, suggested that it would be achieved in his later amendments. Of itself it would not do so, but it would give funding issues a specific status to which the agency would have to have regard when it determines a licence. Putting such a provision on the face of the Bill, it would raise the funding issue above other matters which the agency must consider, including those relating to the water company and its ongoing costings and others relating to the effect on abstractors, consumers and so forth.
	While obviously it is right that the agency should consider the funding issue among other matters, we would not want it to be constrained in the way proposed in the amendment. The agency already has to have regard to the reasonable requirements of the applicant, who can submit a business case to support consideration of the desired time limit of the licence. The agency can already consider such issues, including funding issues, and should do so where they form part of a business case. But, as the noble Baroness, Lady Miller, implied, it should not do so over and above other considerations. There is a balance to be struck and placing greater emphasis on this one dimension would unbalance the approach.
	As regards how the Environment Agency considers the time-limiting of licences, it has guidelines which recognise that longer duration licences may be justified in certain cases, including where the funding consideration is of importance. We believe that the guidelines provide the necessary flexibility to determine the duration of licences in the context of the sustainable management of water resources and investment in those water resources. That is properly a matter for the agency to determine in accordance with its existing duties and responsibilities. In making its decision it has to take into account all considerations and should not place an undue emphasis on funding issues. It should, however, recognise that they are a part of the process.
	I do not believe that it would be helpful to put such a consideration on the face of the Bill. It would constrain the agency in taking an all-round decision in relation to an application for a licence.

Lord Dixon-Smith: My Lords, I am grateful to the noble Lords, Lord Borrie and Lord Sutherland of Houndwood, and my noble friend Lady O'Cathain for their support. I am disappointed that the noble Baroness, Lady Miller of Chilthorne Domer, feels that we do not need to put this requirement on the face of the Bill.
	But the demand for water has to be met. The enormous increases in housing that are being discussed will have to be supplied. They will not be supplied out of the existing infrastructure and water systems in the South East. I am not saying that we are short of water because we are not—we use a very small proportion of the available water in this country—but we do not have adequate conservation to guarantee supplies. It is that issue which lies behind the discussion.
	I heard what the Minister said about the guidelines given to the Environment Agency, but they will not be readily available to people in other walks of life. I have no doubt that we shall be able to get a copy of them from the Library, but whether banks, financial houses and other such bodies will carry them is entirely another matter. It is very doubtful that they will. It is very doubtful that, when discussing the subject generally, they would necessarily have them drawn to their attention.
	I shall consider what the Minister said. We will be discussing later amendments on a similar theme and at some point we may begin to elicit some satisfaction from a reluctant government. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 17 [Protected rights]:

Baroness Byford: moved Amendment No. 22:
	Page 21, line 2, at end insert—
	"( ) A protected right that has been unused for four years shall not cease under subsection (4) above if the licence holder can demonstrate that his pattern of abstraction is or has been over a longer cycle."

Baroness Byford: My Lords, the amendment relates to those abstractors who, perhaps for reasons of sound agricultural management, operate a crop rotation pattern that demands extra water resource at, say, seven-year intervals. The Bill does not make plain that there will be any presumption of flexibility of approach to the removal of these licence rights.
	The agricultural and rural tourism industries have long memories of the damage wrought by the outbreak of foot and mouth and the action—in some cases, the lack of action—taken by Defra. If the renewal of licences is to be a matter for reasoned consideration and a flexible approach, it does no harm to have that reflected in the law. If the true intention is to be rigid and uncaring, then we should change the proposed legislation.
	We have received a submission from the National Farmers' Union and I should like to enlarge upon it. We all agree that Amendment No. 22 raises an important point. Abstraction and irrigation is not necessary in every growing season. This might be due to the weather, the crops under production, the rotational cycle or, more seriously, health considerations for the land and the crops.
	There are many examples of situations where abstraction from surface water is restricted for phytosanitary reasons. These include restrictions for the containment and eradication of notifiable diseases such as potato cyst nematodes—such restrictions are in force on the River Nene—or simply to control the build-up of soil-borne disease such as neck-rot in onions and cavity spot in carrot crops.
	The use of an elongated crop cycle promotes a reduction in the use of plant protection products and such a requirement is frequently seen in the supply contracts from multiple retailers. Organic producers, for example, often rely on the fallow period of rotation for the eradication and control of plant pests and diseases. It is clear that where a cropping pattern is influenced by considerations such as these a licence-holder should not be in any danger of the loss of his abstraction rights.
	The NFU would also welcome the amendment being extended to take into account future changes in production where there is under-production of crops in response to market considerations.
	We had a lengthy debate yesterday on the issue of the countryside. For once I was able to say to the noble Lord, Lord Hoyle, who is not in his place, that it was a good debate because it went much wider than agriculture. When we are considering such Bills we must also consider the industries that are directly affected.
	In Grand Committee I had the support of the noble Lord, Lord Livsey, for which I was grateful, and, although she is not in her place today, the noble Baroness, Lady Young of Old Scone, said:
	"I am sure that there is no intention to get in the way of legitimate agricultural rotation, which would simply be nonsensical".—[Official Report, 1/4/03; col. GC142.]
	If the Government do not intend this to be a restriction on agriculture, they should accept the amendment. I hope they do. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I declare an interest as chairman of Somerset Food Links.
	It is clear that even if the Government are not minded to accept this amendment they would be wise to bring forward an amendment along the same lines, as they still have time to do. The noble Baroness, Lady Byford, set out the case for the amendment very cogently. It pays regard to the rights and needs of farmers, particularly those pursuing organic production which, of necessity, involves longer cycles.
	I support the amendment. I hope that the Government will tell the House either that they will accept it or that they will bring forward a similar amendment at Third Reading.

Baroness Farrington of Ribbleton: My Lords, I hope that both noble Baronesses will be pleased to hear that we accept the underlying general concern expressed in Amendment No. 22, and we wish to give further consideration to the best formulation of a suitable amendment to meet the concerns.
	In the case of revocation of unused abstraction licences, we have said that we would not expect the agency to make proposals for revocation where non-use was a part of the operational requirement of the abstractor for valid reasons. The automatic cessation of a protected right after four years of non-use for exempt abstractors might be seen as unfair, as the noble Baronesses have recognised, as it would not allow planned non-use to be taken into account. We will therefore bring forward a suitable government amendment to cater for this situation. On that basis, I hope the noble Baroness, Lady Byford, will be happy to withdraw her amendment.

Baroness Byford: My Lords, in the briefest of time, I thank the Minister. I am delighted, and thank her for agreeing to bring back a suitable government amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 19 [Form, contents and effect of licences]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 23:
	Page 22, line 33, at end insert—
	"(5B) All licenses which were hitherto expressed under subsection (5) of section 46 as remaining in force until revoked shall, over a 6 year period beginning on the 15th July 2012, be reissued to state—
	(a) the date on which they take effect, and
	(b) the date on which they expire.""

Baroness Miller of Chilthorne Domer: My Lords, this amendment seeks to provide a mechanism for the conversion of permanent licences to time-limited status. In Committee, we said that it was in our view essential to introduce greater flexibility into the licensing system, which is vital if future abstraction management is to take account of such factors as climate change and increasing pressure on water resources.
	When such an amendment was moved in Grand Committee, the Minister said that he favoured the conversion of all abstraction licences to time limits but that he would like to achieve this conversion through voluntary means. However, it became apparent, when answering questions about how many permanent licences have been voluntarily converted to time-limited status in the past five years—and I think voluntary conversion only became Government policy from 1999—the Minister replied that he did not know that there were any. In fact, none has been so converted, as was confirmed in answer to a question asked by my noble friend Malcolm Bruce in another place, on 18th July 2002, in column 487 of Hansard.
	I do not believe that a voluntary approach gives any incentive for abstractors to convert their licences. A statutory mechanism is therefore necessary, and it is for that reason that I have brought this amendment back on Report. I beg to move.

Lord Whitty: My Lords, the amendment seeks to impose a time limit on all permanent licences that will still be extant in July 2012 over a period of six years after that date. For all the reasons the noble Baroness underlined and I underlined in Committee, it will be desirable to move everybody on to a time-limited licence. However, the Government's view, based on legal advice, is that automatic conversion of this sort could have significant human rights implications and also give rise to the potential for substantial compensation costs to be paid by the agency—in effect, by all outstanding and non-time-limited abstractors, theoretically, at least.
	The Government have said that we would like to see abstraction licences eventually made subject to a time limit where the cost of doing so is justified. A voluntary, gradualist approach would be preferred; I accept the noble Baroness's indication that there is no voluntary conversion at present, but the Bill's provisions will help to ensure that there is more. The Environment Agency will need to undertake a programme of prioritised conversion of licences, where costs are proportionate to the benefits. It will need to consult on this programme once the Bill becomes law.
	There are a number of measures and features of the new system that will encourage such voluntary conversion. For example, the agency will introduce financial incentives to convert, such as differential charging according to licence status. It will be consulting on a new charging scheme in the autumn. Moving to a time-limited licence where at least six years' notice of non-renewal is given will, in future, offer more security, rather than less, than retaining a non-time-limited permanent licence that could potentially be subject to revocation without notice. Removing the right to compensation where a permanent licence causes damage to the environment should also act as an incentive to conversion. Where abstraction under a time-limited licence causes such damage, the agency should, in most circumstances, rightly compensate because it will in effect have been at fault in granting the licence. In those circumstances, there will be some compensation.
	If we take the other route, compensation and human rights issues could arise for all those who are converted mandatorily as of July 2012. The compensation in that case could be substantial. A much more gradualist, voluntary and co-operative programme, supported by the measures I have outlined, would be a better approach to this conversion. I hope, therefore, that the noble Baroness will accept that our approach is better than her nuclear option, if I can refer to it in that way, and will be less costly to the Government or the Environment Agency and, potentially, the existing abstractors.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. Of course, I do not want to place unnecessary burdens on the public purse by way of compensation. I merely remain concerned that the voluntary mechanism does not seem very effective at the moment regarding the method of conversion. As for the human rights angle, I think I should take this away and discuss it with my noble friend Lord Lester, who has far more experience in that area than I have. The Minister looks excited at that prospect. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer: moved Amendment No. 24:
	Page 22, line 33, at end insert—
	"(5B) Every licence under this Chapter shall be subject to a duty to use the water abstracted in an efficient manner, so as to further water conservation""

Baroness Miller of Chilthorne Domer: My Lords, there are a number of points in the Bill where we could choose to push for proposals on efficiency. Indeed, we voted on one such amendment this morning, in the name of the noble Baroness, Lady Byford. There are two amendments to be debated later, one in my name and one a government amendment. So I will not speak to Amendment No. 24 at great length but will listen to the Minister's reply and take it into account when we debate Amendments Nos. 36 and 160. I beg to move.

Lord Dixon-Smith: My Lords, anything that encourages the efficient use of water has to be beneficial. To that extent, quite obviously, we would support the amendment if we get no satisfaction eventually as we go through the Bill.

Lord Whitty: My Lords, the noble Baroness is correct that we have tabled Amendment No. 160, which would amend the Environment Agency's general duty on water resources to include water efficiency. That would, of itself, have implications for the way in which the Environment Agency dealt with its licences in a more substantial way than adopting the duty on the agency through the water efficiency measures that would be required by the noble Baroness's amendment. Perhaps we can have that discussion when we reach Amendment No. 160. If the noble Baroness is not satisfied at that point, no doubt we can return to it on Third Reading.

Baroness Miller of Chilthorne Domer: I thank the Minister for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer: moved Amendment No. 25:
	Page 22, line 35, at end insert—
	"(6) The agency may licence a number or variety of activities on the same land-holding, by issuing a whole farm licence when it judges that to be in the interests of good regulation."

Baroness Miller of Chilthorne Domer: My Lords, we have heard much from the Government during proceedings on this Bill and during debate on the countryside and CAP reform about a move to streamlining regulations. They have referred to whole farm approaches and so on, so I believe that there is some merit in exploring the matter. The Government decided at Committee stage that different licences were still needed for different activities. Exactly when would issuing a whole farm licence make sense?
	The amendment would give the Environment Agency power, so that when it judged that it was in the interests of good regulation to issue a whole farm licence, it could do so. Of course, the agency might never judge that that is in the interests of good regulation. However, as we move to one-stop advice for farmers and a system of environmental payments based on whole farm activity, I hope that approach is seen to be a good one. I would not want there to be enshrined in the Bill a necessity for the agency to licence everything in the abstraction and empowerment areas separately, without the power to move on it. I emphasise that the agency would issue a licence only if the agency judged it,
	"to be in the interests of good regulation".
	I beg to move.

Lord Hardy of Wath: My Lords, I am a little confused about the last two words of the amendment—"good regulation". As my noble friend said a moment ago, good regulation is the regulation with which the applicant agrees. If the amendment referred to the interests of the community, conservation or good use of water, I would view it with more favour. Regulation should always be good—that should be implicit. We should hear a little more argument in favour of the amendment before we start voting with blanket approval for good regulation.

Lord Whitty: My Lords, of course my noble friend is right that all regulation should be good. However, regulation relating to farmers is regrettably not always applied in the most effective or user-friendly way or with the best outcome. The noble Baroness is right in saying that we would like to move to a whole farm approach. The problem with her amendment is whether one can do that on the unilateral basis of the one dimension of the regulations that applies to farming. The first problem that we have when we develop whole farm approaches to regulation is the definition of a farm. That problem would apply in relation to the application in this case.
	As the noble Baroness recognised, in so far as the activity referred to in her amendment relates to the abstraction of water, it is already possible that the agency can grant a licence to the same person, authorising multiple points and purposes of abstraction, provided that it is from the same source of supply. Most farms would be covered by that potential discretion anyway. There is nothing in the application process to prevent a single application from being made for a licence covering applications from all sources of supply. There would be aggregate charging, and no penalty to the licence holder when separate licences needed to be issued, if they were all covered by one application.
	In a sense, therefore, the proposal is already a possibility, but one without the total context of the rest of regulation for farmers being covered by a whole farm approach. Therefore, reference specifically to whole farm licences in that context is probably not sensible. We would need to wait until we developed the full programme before it made sense.
	There will be other forms of activity where multiple abstraction points and potentially multiple sources would also apply. Therefore, the discretion that already applies to the agency would not be limited to farms, in any case. Large factory and commercial sites might also benefit from that discretion. Therefore, the noble Baroness's amendment is premature, but at some point down the line it could fit in more directly with an overall approach to whole farm planning and regulation.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. I also thank the noble Lord, Lord Hardy of Wath. Rereading my amendment, I agree with him that it should have said something more along the lines of,
	"when the Environment Agency judges it to be good regulation in the interests of its clients",
	or whatever. He is right to point out the sloppy wording.
	The Minister's reply was very helpful. He holds out hope that in future the regulations may be more streamlined. He said that licences could be the subject of one application—I presume that he also meant one licence fee. That being the case, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 26:
	After Clause 19, insert the following new clause—
	"RENEWAL OF LICENCES
	After section 46 of the WRA there is inserted—
	"46ZA RENEWAL OF LICENCES
	(1) Licence renewal will be subject to three tests, namely that—
	(a) environmental sustainability must not be in question;
	(b) the need for the licence is demonstrable;
	(c) the water extracted under the licence is being and will be used efficiently and effectively.
	(2) If the conditions of subsection (1) above are met, except in exceptional circumstances of extraordinary pressure on water resources in that locality, the licence will be renewed for a minimum of six years.""

Baroness Byford: My Lords, when the amendment was before the Committee, we had a very full and thorough debate. We have tried to improve the thoughts that were reflected in the discussions that took place, and have come forward with our suggestion of the three tests for the licences, of which the Government apparently approve.
	The first test is that,
	"environmental sustainability must not be in question".
	The second test is that,
	"the need for the licence is demonstrable".
	The third test is that,
	"the water extracted under the licence is being and will be used efficiently and effectively".
	As I said, our discussions on the matter were full. They ranged from cols. GC 125 to GC 128 of the Official Report of 1st April 2003, and those who spoke in support of the amendment that I moved then included the noble Lords, Lord Borrie and Lord Howie, and my noble friend Lady O'Cathain. We have considered noble Lords' comments carefully, and hope that the new wording will meet some, if not all, of the points made by the Minister.
	The three tests that I mentioned have already been set out by the agency. It is appropriate that they appear as an open commitment in the Bill. The period of six years has been chosen to match the review period stipulated in the European water directive. The get-out clause is an attempt to recognise that we do not control nature on a permanent basis. Water is a most powerful medium, capable of changing its own path without man's assistance. We should not like to have in law a clause that, on the face of it, insisted on renewal in the event of a landslide that blocked a water course or the opening up of an underground channel that dried a water course.
	I have had a contribution from the National Farmers Union, which stated its concerns and its support for the amendment. As recently demonstrated by the joint awarding of the Environment Agency's water efficiency award for the agriculture and horticulture sector, sponsored by the NFU, the efficient use of water in those businesses is actively promoted by the NFU and its members. The NFU "Waterwise" campaign encourages farmers and growers to undertake a simple water audit for their holdings and to track down and eliminate sources of inefficient water use and wastage. Farmers are well aware of the benefits for their businesses that can be achieved by effective and efficient use of water.
	The amendment is important. I beg to move.

Lord Borrie: My Lords, I was reminded by the noble Baroness, Lady O'Cathain, declaring her interest, that perhaps I should have declared my interest and connection as a non-executive director of a water company. I made that declaration at Second Reading and in Committee, but perhaps it is best practice to declare it at each stage of the Bill.
	In a way, the subject of this amendment is part of a theme pursued—but just touched on—in an earlier amendment tabled by the noble Lord, Lord Dixon-Smith, and others. Water companies very strongly need reassurance when they are expected to lay out capital expenditure for vital infrastructure. They want assurance that there will be an adequate period of licence during which they can recover their money. Of course we have had some—I use the word again—assurances of a sort from the Government that if the water company presented a suitable business plan to the Environment Agency, the company might be able to convince the agency that the normal licence length of 12 years should be longer.
	I think that the noble Lord, Lord Whitty, indicated in Grand Committee that the Environment Agency is committed to a presumption of renewal, which is what we are discussing under this amendment. The trouble is that those assurances and statements from either the Minister or the Environment Agency—with due respect to both of them—are not on the face of the Bill and therefore may not satisfy the mythical banker to whom the noble Lord, Lord Dixon-Smith, referred earlier and may not satisfy companies. Consequently, they may not satisfy the needs of future consumers who will want such capital expenditure if adequate supplies are to be assured for the future.
	In Grand Committee, the noble Lord, Lord Whitty, denied—I put it in perhaps a provocative way, though the noble Lord does not usually need much provocation to be very clear and blunt himself—that there was a presumption against renewal. I think that it is implicit in the Bill as it stands that there is a presumption against renewal. I suppose that that is why I see value in Amendment No. 26, which would introduce a presumption in favour. It would give that magic reassurance which I think is so important.

Baroness Miller of Chilthorne Domer: My Lords, I have certain reservations about this amendment as well. I believe that the Bill's current provisions for the renewal of licences are adequate. The Bill also provides for an appeals process. My unease may be more to do with the second part of the amendment, which ties the licence renewal period down to a period of six years. We have discussed at length the issue of climate change and various other pressures. I think that the six-year minimum is likely to be used in practice. However, given all the comments about those pressures, I would be very uneasy if, by accepting the amendment, we removed the ability to grant licences for shorter periods should that become appropriate. We should particularly bear in mind that the amendment would, I believe, cover all licences regardless of whether they applied to very large projects or very small ones or to multiple small abstractions that exceeded the licensing threshold. I therefore have reservations about the amendment.

Lord Whitty: My Lords, I too have reservations about the amendment. There is not, to answer my noble friend Lord Borrie, a presumption either in this legislation or in practice against renewal. Indeed, the Environment Agency has clearly included a presumption of renewal in its published draft guidance on the time-limiting of licences. So the Environment Agency will operate the system on the presumption of renewal. However, it needs some discretion in that regard. The amendment is seeking to introduce into a well established statutory decision-making process a requirement that, where certain conditions are met, the decision is effectively taken out of the hands of the decision-making bodies.
	I am slightly surprised that my noble friend, who has himself been one of those decision-making bodies, can contemplate such a constraint on judgment being made so explicit in primary legislation. Introducing a statutory criterion would tend to predetermine the outcome if the tests in the amendment were met. The general approach to licensing is that there is a presumption for a licence if the conditions are met. That same presumption applies to the renewal of the licence.
	There is an appeals process. In essence, the renewal tests—the judgment of the regulator at the point of application for renewal—really should be seen as a quality check that the conditions of the licence are still met; that changes that could not reasonably be foreseen at the time of grant, such as climate change, have been taken into account; and that there is therefore no reason to go against the presumption of renewal.
	One of the difficulties with the stipulations in the amendment is that the changes since the granting of the first licence, which may have been some time ago—more than 12 years; we are potentially talking about a rolling programme here—will have been gradual rather than dramatic, particularly in relation to climate change, one would hope. Therefore, different judgments have to be made at different times as to whether the licence terms are still appropriate. So a certain amount of judgment has to be exercised even against an administrative presumption of renewal.
	The amendment's effect and implied prescription would tie the hands of the regulator in reaching those judgments. So, with reassurances about how the Environment Agency is approaching this task, I recommend that the House should not accept an amendment that would put on a statutory basis a rigid presumption of renewal.

Baroness Byford: My Lords, before the Minister sits down, will he look at subsection (2) of the amendment? It clearly states:
	"If the conditions of subsection (1) . . . are met, except in exceptional circumstances of extraordinary pressure on water resources in that locality, the licence will be renewed for a minimum of six years".
	So there is a built-in safety valve. I should be grateful if he would comment on that.

Lord Whitty: My Lords, my point is that that is a fairly extreme exception. The amendment specifies, "except in exceptional circumstances", whereas changes may have occurred over the whole 12 years since the licence was granted or most recently renewed. "Exceptional circumstances" suggests a sudden and dramatic emergency, whereas looking forward to the next 12 years, the Environment Agency—the regulator—may well judge that the licence conditions should be changed or the licence should not be renewed in its current form. That is why I say that the amendment greatly constrains the judgment of the regulator. The provision which the noble Baroness quoted deals with an extreme example of change which would allow the regulator to behave differently from the presumption. There is a whole range of circumstances where there may be other matters to be taken into consideration when making the judgment on a renewal application.

Baroness Byford: My Lords, I follow the Minister's argument but I do not accept it. I thank the noble Lord, Lord Borrie, for his support. I think that people generally—not just water companies, but everyone who uses water, particularly those whom I know well within the farming community—are looking for reassurance. The Minister said that the Environment Agency will operate a presumption that, subject to the requirements, renewal will be granted. However, the Bill does not state that. The Environment Agency is not answerable to anyone. It may be answerable to the Government as it is a government agency, but it is not answerable to this House. I am certainly not happy with the Minister's answer. We shall return to the matter at Third Reading. I hope that the Government will give it further consideration. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sutherland of Houndwood: moved Amendment No. 27:
	After Clause 19, insert the following new clause—
	"COMMENCEMENT AND E"PIRY OF LICENCES
	After section 46 of the WRA there is inserted—
	"46B COMMENCEMENT AND E"PIRY OF LICENCES
	(1) A licence granted under this Chapter to abstract water—
	(a) to prevent interference with any mining, quarrying or engineering operations (whether underground or surface); or
	(b) to prevent damage to works resulting from such operations ("de-watering abstractions");
	shall be stated to take effect and to expire simultaneously with any planning permission or any extension or amendment to any planning permission granted for such mining, quarrying or engineering operations instead of a specific date, or dates, in the licence for the de-watering abstraction itself.
	(2) In all other respects, reference in this Chapter to the date on which a licence is stated to take effect and on which it expires, insofar as a licence for de-watering abstractions is concerned, refers to the commencement and expiry dates comprised in any planning permission authorising the mining, quarrying or engineering operations relevant to the de-watering abstraction.""

Lord Sutherland of Houndwood: My Lords, I rise to speak in support of Amendment No. 27. I wish to take a few moments to make some general remarks which apply to other amendments under my name; that is, Amendments Nos. 28, 32, 183 and 185. Those remarks, if made now, need not be repeated. I give that commitment.
	I declare an interest as a non-executive chairman of the Quarry Products Association. I support the general principles of the Bill to maintain quantity and quality of water—who could not? But the amendments under my name relate to the way in which the provisions of the Bill have relevance to the quarrying industry in particular. That is an important point.
	A distinction must be drawn between those who use water in the processes of their respective industries and the needs of the quarrying industry to extract water literally in order to keep digging and then to return that water to the aquifer either immediately or after storage at equivalent quality. The point about the quarrying industry is that the water is not lost in either quantity or quality in this process of abstraction.
	My initial proposal at Committee stage was to ask for the quarrying industry therefore to be exempted from the type of licensing process envisaged in the Bill. In the light of discussion at that stage and the comments of the Minister, I have returned with this amendment rather than my original amendment. I hope that this amendment can be regarded as both conciliatory and consensual.
	Amendment No. 27 seeks to protect the quarrying industry from what I can only view as a potential double hazard; that is, the need for planning permission and a licence to abstract water to run on different timescales. The amendment proposes that the licence and the planning permission should run concurrently with the same expiry date. Why is that important? It is important due to a matter already touched on in earlier amendments—the length of the investment cycle in the quarrying industry. I need not go over the details of that as that matter was covered in earlier discussion.
	The Bill, if unamended, would reduce to 12 years the horizon under which significant investment is considered, with a time warning given after six. Let us consider the implications of that. I give a specific example to impress on the House the seriousness which such a use of powers could have, not simply for the quarrying industry. The Torr Quarry near Frome currently supplies virtually all the limestone needs of the South East of England. That is a consequence of geology not of business strategy as that is where the limestone is found. The quarry has been managed with great skill. Investment has been channelled into developing an adequate rail transport infrastructure to ensure that the flow of material to the construction sites of the South East of England that need the material takes place in the most effective and efficient manner.
	Such investment in both the quarry and the infrastructure is unrealistic over a short investment timescale—a 12-year period. But what is at issue is the supply of limestone for construction, the huge majority of which occurs in the South East of England. The Minister does not need reminding of the ambitious government plans for construction in that area. That one quarry is pivotal to those plans.
	I remind the House, however, that the issue is not simply the use of water and the possible contamination of water—as might arise in other industries—but the dewatering necessary to allow limestone extraction in this case and the return of the water to the aquifer. That is different from the position of some other industries which have an interest in this area which use water and, in so doing, diminish either the quantity or the quality of water returned to the aquifer.
	I also remind the House that the measure does not imply an avoidance of proper regulation because planning permissions are subject to a rolling 15 year reaffirmation and regranting. The Environment Agency has a role in that process as a statutory consultee. I believe that proper regulation as proposed in the amendment in the spirit of the Bill can be observed along with the provisions already in place. I beg to move.

Lord Berkeley: My Lords, I support the amendment. I apologise for not having been present at previous stages of the Bill. I am a civil engineer and I have done some quarrying work in my youth, if one can call it that. The points made by the noble Lord, Lord Sutherland, are very valid.
	No one likes quarries. They comprise big holes in the ground and often you cannot see them. Often they last for decades and sometimes more than 100 years. However, as the noble Lord said, people like the products of quarries. They want cheap buildings, roads, railways and harbours. The quarrying industry is a classic case of an industry that needs to plan for decades ahead in order to produce stone of the right quality at the right volume in an environmentally friendly way. As the noble Lord said, there is a need to dewater and return the water after it has been processed and cleaned.
	I declare an interest as chairman of the Rail Freight Group. As the noble Lord also said, much of the material we are discussing is transported by rail to the benefit of the environment. Investment is made in the equipment needed for the crushing, loading, and screening processes and in all the other equipment that is required, including for concrete mixing. That is part of a big chain of business—it is almost a logistics chain—which could be affected if the businesses that run quarries are required to take the risk involved in reapplying for a licence after a comparatively short period.
	If quarry companies have obtained the relevant planning permission, having consulted the Environment Agency, and having undergone very strict environmental assessments, it is reasonable for them to have the certainty of being able to carry on their business for the length of the planning permission without the worry of whether they can continue to extract water. If they cannot extract water, they cannot carry on the business.
	The noble Lord, Lord Borrie, talked of the importance of assurance as regards those who have invested in the area we are discussing. Yesterday at Question Time we discussed the Royal Mail. The noble Lord, Lord Sainsbury, said that it was important that the Government did not interfere with business investments. I am not sure that I agreed with him on that occasion, but that was for another reason. However, it is important that uncertainty should be removed. The amendment is a reasonable attempt to bring the two timescales involved in planning permission and licences into line. I hope that if the Government cannot accept the wording of the amendment, my noble friend will at least agree to take it away and come back with a measure that would achieve a similar result.

Baroness Miller of Chilthorne Domer: My Lords, in speaking to the amendment I should declare an interest as a Somerset county councillor. I believe that the quarry to which the noble Lord referred is situated in Frome, Somerset. My council is the mineral planning authority for that area. Considering the scale of its operations the quarrying industry in that area has done a great job in terms of considerate working and, in particular, in relandscaping worked areas. I pay tribute to the achievement of the quarrying industry in that regard.
	I still have in mind a question as to the fact that dewatering is, as the noble Lord said, a closed-cycle operation. The water is taken out and the same quantity is put back. I think that he said that it was of equivalent quality, not necessarily the same quality. I am not sure what the difference is. I do not know whether dewatering is defined anywhere as a closed cycle, so I am not sure what, if we agreed to the amendment, we would understand dewatering legally to be. I may have become more interested in exact definitions as we have worked our way through the Bill, and I believe that they are important.
	In general principle, I have accepted the argument that we should require all people, whether trickle irrigators, water companies or quarries, to be brought within the licensing arrangements for the Bill. I am minded to stay with that position, except for the persuasive argument of the noble Lord, Lord Sutherland of Houndwood, that dewatering is a closed cycle. I still have certain reservations.
	The Government are in a difficult position on the amendment, however. Dewatering is a closed cycle and so they might not want to accept the amendment, but every time we mention British Waterways, which wants some of its reservoirs to stay outside the system, the Government are minded to allow it to do so. They say that that is a closed-water system and that British Waterways will use only the water from those reservoirs to fill those canals and nothing else. A slight double standard would seem to be operating if the Government did not like the amendments of the noble Lord, Lord Sutherland, but did like those suggested by British Waterways.

Lord Dixon-Smith: My Lords, the amendment presents another aspect of the problem that all those involved in the water industry face, as did one of my earlier amendments. The reality is that, as with the water industry itself, a long-term industry such as the quarrying industry has very distinctive and specialist long-term problems. Above all else, the quarrying industry is not a water consumer, generally speaking. It takes water from one place, where it is an obstruction to its work, and puts it back in another. It clearly cannot put it back in the same hole; were it to do so, that would be such a circular motion that it would never get any quarrying done.
	The industry could presumably recharge the underground aquifer from which it abstracted the water at a safe distance so that it was not a problem, but I suspect that sometimes it uses surface disposal into a river or whatever. In the context of catchment-area management, which is one of the drivers for the changes in the licensing system proposed in the Bill, that is entirely acceptable. The catchment area is not losing water resource at all, and to that extent I completely support the noble Lord's thrust.
	The difference of treatment mentioned by the noble Baroness, Lady Miller of Chilthorne Domer, as regards British Waterways is an interesting conjunction that I had not reached myself. It indicates that the Government ought to think a little carefully about how they treat the amendment and the noble Lord's other amendments. They warrant the most serious consideration. I know that we shall get all the assurances that we have had previously on the matter, but people like what they can see. It is not that they do not like something if they have to go to research it to find out about it; they might be jolly relieved when they find the answer. However, if we can put the answer where they can see it in the Bill, it would save everyone a great deal of trouble. I definitely support the amendment.

Baroness Farrington of Ribbleton: My Lords, I shall begin, in response to the noble Lord, Lord Sutherland of Houndwood, by dealing with the mechanism that he proposes in the amendment. I shall then move on to some of the issues that underlie his reason for tabling the amendment.
	The amendment would completely remove from the Environment Agency and, incidentally, the Secretary of State on appeal, the responsibility for determining the key condition of the time limit to apply to transfer licences, but only those granted for dewatering activities. The duty would, in effect, be transferred to planning authorities, which are not set up to deal with it. Indeed, there is no statutory requirement for a planning authority to give effect to the Environment Agency's recommendations on the matter.
	I acknowledge that the noble Lord is right that the agency is a statutory consultee for planning applications, but there is no requirement for the agency's views to be incorporated by the planning authority. If it is right that a transfer licence should initially be granted for a fixed period to deal with the uncertainties facing us in water resources management, that is the decision that should be arrived at, whoever takes it. The amendment may assume, of course, that the planning authority would in some way take less heed of the implied significance of its decision for water resources when deciding the appropriate duration of the planning permission. Alternately, it could imply that the duration of planning permission should be shorter for water resources reasons. Neither of those can be right. Each case must be considered on its merits.
	The amendment would confuse responsibilities between the two regulatory regimes, which were set up for entirely different purposes. We agree that there must be liaison and co-operation between them. That already exists and works well. However, it cannot be right that the responsibilities of the planning regime are effectively removed and given to the other regime in just one particular aspect and for only one particular industry. Most, if not all, industries are subject to more than one regulatory regime, and we have to learn to deal with that.
	The issue underlying the amendment is, of course, the question of the initial investment uncertainties if a transfer licence is shorter than the intended life of the quarry. We recognise the concerns of my noble friend Lord Berkeley and those that my noble friend Lord Borrie raised on previous occasions. We recognise that there are genuine and important concerns, but the problem is not insurmountable, and it is not entirely peculiar to the quarrying industry.
	As we sought to do in Grand Committee, I can reassure the noble Lord that quarry and mine operators will have the same opportunities as all other abstractors to submit to the Environment Agency a business case in support of their applications, addressing issues relating to the proposed life of the initial licence to be granted. The time restriction on the operation would form part of such a submission, and the agency would have proper regard to it, as would the Secretary of State on any appeal. I hope that the noble Lord will accept the arguments against the mechanism that he proposes in the amendment.
	With regard to the points raised by the noble Lord, Lord Dixon-Smith, the noble Baroness, Lady Miller of Chilthorne Domer, and my noble friend Lord Berkeley, the position of mining and quarrying companies will be no different from that of industrial abstractors, in so far as local effects on the water environment are concerned. We recognise that they are not net consumers of water, although it is not unusual for the water taken out of the ground to be returned to a nearby stream. As far as concerns the groundwater resource, that may be a total loss. Quarry dewatering is achieved by pumping groundwater, as noble Lords have said, to enable dry working of the quarry. The water is usually put back into surface streams. Therefore, it may be a total loss to the groundwater resources.
	Moreover—and this was one of the concerns expressed by the noble Lord, Lord Dixon-Smith, and the noble Baroness, Lady Miller of Chilthorne Domer—there is potential for significant adverse effects on adjacent groundwater sources and dependent features, such as springs, wetland, and SSSIs. In some circumstances where the acquifer generally may be already over-committed, especially in the future with climate change, it could reduce the availability of scarce resources for others.
	However, we recognise that there may be circumstances where we need to consider the concerns of the noble Lord. I understand that a visit to a quarry has been arranged with a view to considering such issues. If it would be helpful, I can assure the noble Lord, Lord Sutherland, that a meeting could be arranged following that visit, and before Third Reading, to see whether we are able to come closer to reassuring him.
	I stress, yet again, that where there is a reasonable requirement that depends upon the abstraction of water, a licence will generally be granted, provided only that the rights of other users and the environment are adequately protected. I hope that that reassures the noble Lord, Lord Dixon-Smith. Where that is the case, there will be no reason for the Environment Agency to refuse a licence. If nothing has changed, the same will apply at renewal. That is what we mean by presumption of grant and of renewal. This is how the system has operated since its inception. I have responded in as much detail as possible, because I hope to reassure the noble Lord. We are certainly happy for officials to meet him.
	Reference has been made to British Waterways' reservoirs. I should point out that not all dewatering is a closed system. Indeed, as I have already said, there may be a loss from groundwater into streams. We are exempting only transfers from British Waterways' reservoirs to British Waterways' canals where they are for navigation and not other purposes. British Waterways' use is for productive purposes, whereas, in the case of dewatering, it is a by-product of the industrial activity taking place.
	I have sought to answer the noble Lord's concerns, though I suspect he may wish to seek a meeting with officials between now and Third Reading. In the mean time, I hope that he feels reassured enough not to press his amendment today.

Lord Berkeley: My Lords, the noble Baroness said that British Waterways' water is for "productive purposes", but I would suggest that it is a matter of keeping a canal going so that barges can travel up and down it. Surely a quarry exists also for productive purposes, with the watering being an essential means of achieving those aims. What is the difference?

Baroness Farrington of Ribbleton: My Lords, the difference is that it is impossible to travel up and down a canal without having water in it. That strikes me as the prime purpose of the water. The dewatering process is a by-product of the process of quarrying. The different modes and systems involved in dewatering and returning the water in equivalent quality is a matter that can be considered separately. There is no alternative to having water in the canal if one wishes the boat to travel along it.

Lord Berkeley: My Lords, there is no alternative to dewatering a quarry if you wish to get stone out of it.

Baroness Farrington of Ribbleton: My Lords, we are not, at this stage, discussing the dewatering of quarries; we are discussing whether it can reasonably be said to be different in every case from other commercial uses that require dewatering because of the processes involved.

Lord Sutherland of Houndwood: My Lords, I thank the Minister for what I regard as a conciliatory reply, even if it is not quite consensual; indeed, that remains to be seen. I also thank the noble Lords, Lord Berkeley and Lord Dixon-Smith, for their support, as I do the noble Baroness, Lady Miller of Chilthorne Domer. Equally, perhaps I may couple that with thanks for the tribute paid to the good practice of one of our members at Torr quarry. I believe that to be significant: the industry is responsible.
	I have a few points to make. Beguiled, as I was, by the productivity of canals, I shall not enter into that argument. I begin with the question of what "dewatering" is legally. When St Augustine was asked "What is time?" He replied, "Well, when nobody asks me, I know what it is; but the minute somebody asks me I can't produce a definition that's adequate". That seems to me to be the same as the problem of giving a legal definition of "dewatering", although I dare say some lawyer could do so.
	The issue raised by the noble Baroness was whether it is a closed cycle, and how that relates to quantity and quality. The quality is already checked. I shall give noble Lords an example. I know of a quarry that was fined by way of a penalty because its dewatering process left too much silt: it happened too quickly in the water that was abstracted and then returned. Therefore, there are processes already in place—and that will continue to be so—to deal with such situations so that quality can be measured.
	The question of quantity and where the water goes is, perhaps, an issue for further discussion. The quantity can be measured. Equally, depending on pragmatic concerns, some of the water is stored in quarries. However, if the issue were to become whether one could store the water and return it to the original place, it would be a technical and technological question that could be confronted and considered to see whether it is practicable. I hope that my remarks deal with those questions.
	The Minister's reply is such that I beg leave to withdraw the amendment at this stage. However, I reserve my position following the discussions that will take place in due course.

Amendment, by leave, withdrawn.
	Clause 20 [Limited extension of abstraction licence validity]:

Lord Sutherland of Houndwood: moved Amendment No. 28:
	Page 23, leave out lines 10 and 11.

Lord Sutherland of Houndwood: My Lords, I shall not speak at equivalent length on this amendment. I have set the context. The point of the amendment is very straightforward. It is to allow that a licence legitimately held can be transferred on the sale of a quarry, just as planning permission is currently transferred on such a sale.
	Consolidation has taken place in the industry, and has maximised both high quality and efficiency, and consolidation will continue to take place. It would be a serious impediment if a licence had to be re-applied for in the possible event of the consolidation of two major companies and an application had to be made for every quarry that they ran, or, alternatively, where a single quarry is amalgamated into larger combine. I hope that the proposal is straightforward; namely, that licences can be transferred, all other things being equal. I beg to move.

Lord Dixon-Smith: My Lords, I rise with a certain amount of regret to express my slight concern about the amendment. Clause 20 makes the burden of responsibility for the renewal of an extraction licence—particularly the initiation of the process—a responsibility of the Environment Agency. That is not unreasonable. The amendment, however, would shift that responsibility back to the applicant.
	In the case of a large quarrying business or any other large industrial use, that is well and fine. But we have talked about the administrative burdens on agriculture. I am not sure that, from the point of view of most of the agricultural industry, one would not rather see the initiation responsibility with the Environment Agency. One could be much more sure that the Environment Agency would not forget about it—whereas I would not absolutely guarantee my own memory, or indeed that of every farmer in the country. For that reason, we have a concern about the amendment—although anything that makes the process easier would be welcome.

Baroness Farrington of Ribbleton: My Lords, I am slightly concerned. My understanding is that the effect of the amendment would be to allow the extension of a time-limited licence under the remaining conditions of this clause, even if the person who makes the application for renewal is someone other than the existing licence holder.
	It seems to us most unlikely that a person other than the existing licence holder would either want or be in a position to meet the appropriate application for the purposes of this clause to operate. We are not persuaded that parties in negotiation for a transaction would necessarily want this, given that the seller would want to preserve his own right until such time as the sale was agreed.
	I hope I have clarified the matter. If I have not clarified the position with regard to an existing licensee, the licensee will be able to transfer the licence to a new owner at any time simply by giving notice to the agency. If the noble Lord, Lord Sutherland, has any remaining concerns in this area, I think I ought to offer to respond to any queries he raises. However, I hope that I have been able to reassure him.

Lord Sutherland of Houndwood: My Lords, I thank the noble Baroness for that reply. I have heard the concerns expressed both by the noble Baroness and by the noble Lord, Lord Dixon-Smith. I beg leave to withdraw the amendment and I will consider the points raised.

Amendment, by leave, withdrawn.
	Clause 24 [Claims arising out of water abstraction]:

Baroness O'Cathain: moved Amendment No. 29:
	Page 30, line 28, at end insert—
	"(8) It shall be a defence to proceedings brought under this section that the abstractor was abstracting the water in accordance with the provisions of a licence granted under this Chapter.""

Baroness O'Cathain: My Lords, my noble friends Lady Byford and Lord Dixon-Smith have added their names to the amendment. It proposes to add a new subsection (8) for the purpose of providing a suggested defence of compliance with an extraction licence. It would, of course, be necessary to remove the quotation marks at the end of subsection (7) of proposed new Section 48A before adding the new subsection.
	As the Bill stands, Clause 24 would insert a new Section 48A into the Water Resources Act 1991 which would create a new statutory tort of causing damage by abstraction of water. However, except where small quantities of water are involved, it is generally necessary to obtain an extraction licence from the Environment Agency. This enables the agency to assess the impact of the proposed extraction and, then, taking its assessment into account, refuse a licence or grant a licence with or without conditions. In this connection, the agency should be better placed than the abstractor to assess the potential impact of an abstraction.
	In the circumstances, when an abstractor is complying with the conditions of his licence, it seems reasonable that such compliance should amount to a defence to any proceedings brought under the proposed new Section 48A of the Water Resources Act. I beg to move.

Lord Whitty: My Lords, Clause 24 introduces the right to sue any abstractor who causes damage. The intention is that the change will foster greater environmental responsibility and respect for other property among the abstractors. They will need to remain alert to the possibility that they are harming others or otherwise they could be subject to a claim for damages.
	In granting a licence, the agency will not have considered the effect of abstraction on the property of third parties. It will have considered only the effect on water resources, on the environment and on the rights of other abstractors to abstract. It is important to bear in mind that it is the abstraction of water that can cause damage, irrespective of whether this is under licence or not.
	The abstraction licences allow abstraction without committing any offence. It is not a licence to allow or cause harm to the environment, damage to property or any other detrimental effect. Therefore, the indemnity that the clause would give, with the abstractor abstracting water in line with a licence but against causing damage to the property of someone else, would not have been taken into account in the granting of the licence. It is part of everyone's general duty of care to ensure that in conducting their businesses, which in this case would include the abstraction of water, they do not do so to the detriment of the property of others. I believe that that is far too wide an indemnity to be inserted in the Bill and I hope that the noble Baroness will not pursue the amendment.

Baroness Byford: My Lords, before the noble Lord sits down, does he not consider that there should be a responsibility for the damage that one person might do to another? If damage is above the ground, it is easy to see, but damage can be caused to a third party without awareness. Therefore, I believe that there is great strength in the amendment moved by my noble friend and I should be grateful if the Minister would clarify the matter a little further.

Lord Whitty: My Lords, whatever business one is in, one is under a duty of care not to damage someone else's property. The granting of a licence does not override that duty of care. However, the amendment would mean that the person being damaged would not have the right to sue a person who had abstracted water and thereby caused damage. That is not sensible. Not only must the abstractor operate in terms of the licence, he must also operate with regard to the duty of care. Saying simply that he has abstracted water in accordance with the licence is not an adequate defence against the duty to avoid damage to other people's property, whether or not it is above the surface and immediately visible.

Baroness O'Cathain: My Lords, I do not know whether the Minister heard what I said. I said that the agency grants the abstraction licence, so therefore the agency assesses the impact of the proposed abstraction. Then, taking its assessment into account, it can refuse a licence. Is there no responsibility on the agency?
	The Minister said that the Environment Agency took into account water resources, the environment and the right of other abstractors to abstract, but surely the agency's assessment must take into account the possible impact on third parties. Is that not a duty on the Environment Agency when granting an abstraction licence? We must not forget that it grants the licence, so can the Minister clarify the point?

Lord Whitty: My Lords, we are in danger of getting out of order again. The agency is bound to take into account damage to the environment, which may include property damage, and damage to the right or ability of another abstractor to abstract, but it does not take into account any more general, non-environmental damage which any business is obliged to try to avoid. To give an indemnity against that simply because an abstractor is fulfilling the terms of his licence on abstraction would be excessive and would not be granted in other circumstances.
	It is not the duty of the Environment Agency to ensure that by giving a licence it prevents someone causing damage further down the line. In granting the licence, it must take into account the specifics.

Baroness O'Cathain: My Lords, I thank the Minister for that reply. Obviously, I am unhappy about it and shall seek advice on whether an amendment to limit some of the proceedings brought against the abstractor under the proposed Section 48A of the Water Resources Act can be limited. I shall return to the matter at Third Reading and in the meantime beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	Clause 25 [Compensation for modification of licence on direction of Secretary of State]:

Baroness O'Cathain: moved Amendment No. 30:
	Page 30, line 43, at end insert—
	"( ) After subsection (4) there is inserted—
	"( ) Subsection (4) above shall not apply while the possibility of the abstraction of water under the licence constitutes part of—
	(a) any water resource management scheme maintained under section 20, 20A or 20B above; or
	(b) any drought plan maintained under section 39B above.""

Baroness O'Cathain: My Lords, Amendment No. 30 amends Clause 25 and deals with sleeper licences. On 3rd April, the third day of Grand Committee, we had a long debate on sleeper licences.
	If my amendment is carried, the reduction of sleeper licences from seven to four years under Clause 25 would not apply where water may be abstracted as part of the,
	"water resource management scheme . . . or any drought plan".
	At the moment, water companies are required to produce water resource management plans. The Bill places these and drought plans on a statutory basis. Sleeper licences give companies the flexibility they need to manage their water resources. If sleeper licences are reduced from seven to four years, companies may need to revise their existing plans, and, indeed, they might not be able to produce the water required in a drought period.
	We do not have any model which suggests that droughts occur every three and a half years. They could happen every two years, or indeed every year or sometimes not before six years. If drought plans are not in existence, the problem is huge for water consumers.
	When the amendment was discussed in Grand Committee, the Minister said that he was "sympathetic" but argued that the clause was only meant to be used in,
	"a situation where unnecessary, unreasonable non-use of a licence causes damage in one form of another".
	The Minister indicated that if the so-called sleeper licence were part of long-term planning and drought planning, clearly the Environment Agency would be acting unreasonably if it tried to revoke it.
	He continued:
	"Clearly, if there is no damage to the environment or to access to water, the Environment Agency would be acting unreasonably to revoke a licence being used for beneficial purposes".—[Official Report, 3/4/03; col. GC 170.]
	He added, at col. 171, that it,
	"would not be reasonable for the Environment Agency to act against a water company if the sleeper licences . . . were part of a water company's plan".
	At that stage, the Minister sought to justify the new clause on the basis that the agency must be able to intervene for unnecessary non-use of a licence that causes damage or certainty in the management of that water resources plan. He indicated that it was a power for the agency to deal with particular situations in which the abstractor was behaving unreasonably by not using the abstraction rights.
	He argued that,
	"the intervention is a power in certain circumstances to be exerted reasonably and with due regard to all the other duties and powers in the Bill by the Environment Agency".—[Official Report, 3/4/03; col. GC 172.]
	The amendment, in essence, provides water companies with a protection on the face of the Bill against the risk of losing abstraction rights that they might need for water resource management plans and drought plans. It makes a clear distinction between situations in which an abstractor is behaving unreasonably by not using the abstraction rights—in other words, a dog in the manger approach—and those where sleeper licences are an integral part of water resource management plans and drought plans. I beg to move.

Baroness Byford: My Lords, I support my noble friend's amendment. We did indeed have a long discussion in Committee about the whole question of sleeper licences. I believe that changing the length of period over which it is allowable to suspend abstractions without losing one's licence needs to be carefully examined.
	In Committee, the Minister was adamant that the Environment Agency must review the use or non-use of licences in the light of reasonableness. He said:
	"The Environment Agency will not be required to take away a licence that has not been used for four years: it will have a power to do so, if, in all reasonable circumstances, it judges that there is unreasonable non-use of the licence that is either causing environmental damage or preventing access to the water for other potential users".—[Official Report, 3/4/03; col. GC 168.]
	I have some questions for the Minister. In drafting the Bill, did the Government and their advisers calculate four years? Did someone go out and ask non-users why they were not abstracting water? Did that someone then work out the mathematical average time that it took for non-users to become "no further requirement for"? What factors were involved in reaching four, rather than two or five, years? Will the changing face of Britain have an effect in years to come on that figure?
	There is almost no industry left. When it has all gone, will water abstraction be done by mining and quarrying, water undertakers and food producers alone? When that happens, will four years be workable, never mind reasonable? What happens to a farmer or a water undertaker who loses the right to abstract and then needs it again? Does the farmer have to relocate? Does he have to change his crop rotation? Does he have to let his beasts die of thirst first? At current prices, it may become more economical to slaughter them than to pay water bowsers to visit the farm.
	Does the water undertaker tell developers of the new 4,000 unit estate that there will be no local water supply? Is a water undertaker allowed to do just that? Is he allowed to charge more for supply to that estate because it comes from Wales or Scotland, or will all the region's customers have to pay?
	Will the Minister give details of how the four years was reached? Will he tell us how many abstraction licences have not been used for four, five, six or seven years? Can he subdivide those figures by region and then give us the water volumes involved? Will he also set against that breakdown of unused capacity the totals of unfilled demand represented by would-be abstractors in each region who are unable to gain licences?
	We have pursued the amendment at length in Committee, but many of those basic questions have not been answered. Will the Minister provide the totals, for example, for each water undertaker of the "imports" from other regions that will be rendered unnecessary by the reduction from seven to four years? Will he also provide an estimate of the costs, by water undertaker, that will be saved by taking this step and the likely effect on household bills?
	If I may, I shall discuss the environment. Will the Minister tell us what calculations have been made of improvements that will follow on from this action? Can he cite examples in each region of species to be protected that will otherwise be in decline or fail? Will he give us calculations of the effect on the landscape, with its beneficial follow-through to tourism?
	In other words, can the Minister lay out in detail the thinking, calculations and the evidence that this change to abstraction licences will result in measurable, tangible, obvious benefits to some parts of society? The Minister indicated previously that the Government are not minded to give way on this amendment. If so, those basic questions deserve a reply.

Lord Sutherland of Houndwood: My Lords, I wish to support the amendment on the grounds that, in any large quarrying footprint, different areas of the quarry may be worked at different times but all within the same investment horizon. The reasons for a section of a quarry not being worked, with the result that it may require a separate licence, may be beyond the control of the company in question. None the less, the investment assumes that that section can be worked without further impediment. I therefore support the amendment.

Lord Whitty: My Lords, we have debated the matter at great length before; I am grateful to both noble Baronesses for quoting large chunks of my speeches on the subject. But the noble Baroness, Lady Byford, is asking me a whole range of questions about why the existing seven years will be reduced to four years. I cannot answer most of her questions.
	We are moving into an era in which we need tighter control of water resources. Therefore, if there is a damaging sleeper licence, it would be sensible to be able to intervene earlier than previously. We hope that the number of occasions on which that would occur would be relatively small. As I said, the Environment Agency would not be acting reasonably were it to revoke a sleeper licence when the non-use of the ability to abstract was because of a shift in part of the quarry that was being used, or for other planning purposes.
	This part of the Bill provides for where the revocation can be made without compensation. The circumstances in which that may arise will be limited: to where the existence of that sleeper licence caused environmental damage because failure to abstract had caused problems down stream, or whatever; or where it had damaged the interest of another abstractor; and where it was unjustified on grounds of the type referred to in the debate in relation to the quarrying and farming industry.
	It would of course also be unreasonable for the Environment Agency to act were the provision to be part of the undertaking's drought plan or water resource management plan, which itself would have already been agreed by the Environment Agency. It would be somewhat bizarre were the Environment Agency to act to revoke something that was part of a plan to which it had already been party.
	The number of circumstances in which that has arisen under seven years has been relatively limited; the number that would arise under four years would therefore be limited; but it could exist and cause serious damage to another abstractor or to the environment further downstream. Therefore, we need to provide for the Environment Agency to act without fear of being faced with substantial compensation claims as a result.
	However, the instances referred to by the noble Baronesses, Lady O'Cathain and Lady Byford, and by the noble Lord, Lord Sutherland, would not fall within that category. In those circumstances, it would not be reasonable for the Environment Agency so to act.
	I know that we are going over ground covered in Grand Committee, but I hope that the noble Baroness will accept that explanation and the need to have tighter controls over damaging sleeper licences, but not give the Environment Agency carte blanche to intervene where the non-use is part of a sensible planned use of resources of the type described.

Baroness Byford: My Lords, before the noble Lord sits down, perhaps I may press him a little further. If someone is causing damage, my understanding is—perhaps the Minister can clarify this for me—that the Environment Agency has existing responsibilities under which, if someone is damaging the environment or doing something that he should not be doing, the agency can act straight away. That issue is entirely separate from that of the period of licence renewal being reduced from seven to four years.
	I find the Minister's argument illogical. I hope that I am not the only noble Lord currently in the Chamber who is confused. We are dealing with two separate issues. No one in the House has suggested that where damage is being done, action should not be taken straight away against someone damaging the water course, the environment, or whatever. I should like to make that clear, because if the Minister thinks that we want to defend people who damage them, I have obviously not expressed our position clearly.
	My various questions were to raise why the Government wish to reduce the number from seven to four: why that number rather than any other ratio? I know that I asked many questions. If the Minister is not able to answer them immediately—I accept that he probably is not—I should be grateful for a general steer. I should then be quite happy for him to respond later. But, for the sake of the House, I want to clarify that we are dealing with two separate issues that have unfortunately been merged. One is damage, and I am sure that all of us would say that it should be dealt with immediately. If it is not dealt with properly, that licence should be revoked. The other issue, to which my noble friend's amendment relates, is the reduction of a sleeper licence from seven years to four years. I hope that the Minister can clarify that.

Lord Whitty: My Lords, there is no mathematical formula that shows that four years is the exact figure. The Environment Agency has some powers to intervene in the case of emergency damage but not when there is a long-term effect from a failure to abstract water at a particular point for no good reason or no reason that is justifiable in terms of the management of the facility or the use of the water. After all, the revocation of a licence that has not been used effectively releases increasingly scarce resources for somebody else to use.
	It seemed sensible to reduce from seven to four years the period of non-use, potentially damaging use or, at a minimum, failure to allow the water to be used by somebody else. We consulted abstractors on the matter in 1998, when we discussed the general approach to water planning. By and large, a reduction was felt to be sensible. I cannot justify four years mathematically. If either noble Baroness requires further information, I will, of course, write, but there is no more precise answer, except to say that it was generally regarded as a reasonable move.

Baroness O'Cathain: My Lords, I thank the Minister. I had a certain amount of sympathy with him, when he was confronted with the questions asked by my noble friend Lady Byford. I thought, "My goodness. How many more?". I asked her sotto voce, and she said, "Probably 20. Maybe more". We know that there is no way that the Minister could reply to those questions at this stage. However, I must say, sparing my noble friend's blushes, that it shows the amount of research that she does. She gave us a clear picture of the sort of problems that could arise.
	I reiterate what was said. There is no question of damaging the environment. Anybody who damages the environment must be penalised there and then. I do not intend to divide the House on the amendment, but I certainly intend to bring the matter back. In the mean time, I want the Minister to consider a couple of questions from me, as opposed to my noble friend. The Minister has discussed the matter with abstractors, who seemed generally to accept the reduction from seven to four. I ask him specifically whether they have looked at the matter on a regional basis.
	I come back to a point that was made either at Second Reading or in Grand Committee: the average amount of water per head in the South East is less than that per capita in Sudan or Ethiopia. We have a massive water shortage in the South East. By the very nature of the climatic conditions that prevail in the South and South East, we are more likely to be in drought situations. I am sure that few people living in certain parts of the country—the North East, the Borders or up there in the Lake District—are subjected to hosepipe bans. I remember many such bans, fortunately not in the past few years. With the additional threat—I use the word advisedly—that a lot more housing will be situated in the South East—something like 46,500 new homes—there are bound to be problems with water resource management plans. The sleeper licence is absolutely imperative for drought planning.
	Although the Bill is environmentally skewed—rightly—we should not forget that one of the big things about water is that we must produce clean, usable water for everybody in the country on a regular basis. If we decide to do away with sleeper licences or reduce them to four years, we could fail in our duty to do that. The Environment Agency would be found to have failed. But because the Environment Agency is an agency for government, it would come back to the Government. As a director of a water company, it would be quite nice not to have to face the brouhaha of the local population when it is reduced to standpipes and hose-pipe bans. We would be able to say, "Oh, it is the Government's fault". But, of course, everyone says that anyway.
	If there is a drought, I should like the Minister to give some consideration to what the Government would be able to do. Would they be able to revitalise an abstraction licence and give a quick—within a day—abstraction licence to a water company? Indeed, would they be able to reactivate that? I am not so sure that they would. I must say—rather flippantly—that if the people who have given advice to the Minister, whether officials or other abstractors, have said, "Well, probably, four years is the maximum we need", are they such brilliant weather forecasters that we can rely on them to reveal where we should go for our holidays for the next seven, eight or 10 years? I know that is a slightly flippant comment, but in the circumstances it is a very serious issue. I shall not seek the opinion of the House today but I hope that between now and Third Reading, the Minister will give some thought to the points raised—certainly those raised by my noble friend—and revisit this issue. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 31:
	Page 31, line 24, at end insert—
	"(4C) Whenever the Secretary of State determines that compensation should not be paid under this section in respect of the variation of a licence on the grounds set out in subsection (4A) above, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator.
	(4D) When a dispute is referred to arbitration under subsection (4C) above—
	(a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and
	(b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.""

Baroness O'Cathain: My Lords, in moving Amendment No. 31, I speak also to Amendment No. 35. I assure noble Lords that I shall be brief. Clauses 25 and 27 will, in prescribed circumstances, empower the Secretary of State to deprive licence holders of rights under existing licences without the payment of compensation. This amendment provides a right of appeal against the merits of such decisions to some independent person or tribunal. It recognises that existing rights are affected.
	This is part of a package of amendments on appeals which aim to ensure that there are rights of appeal on the merits of the regulator's decisions to independent persons, taking into account that there are already such rights in relation to the granting of abstraction licences and decisions on competition issues. These amendments, and other appeal provisions, replace what I would refer to as our "jumbo" appeals amendment in Grand Committee. It was somewhat complex and caused some confusion. Instead, specific amendments are proposed to provisions where regulatory decisions affect existing rights or are punitive in nature. I beg to move.

Lord Borrie: My Lords, the noble Baroness, Lady O'Cathain, and, no doubt, her colleagues, have made quite an effort to move away from the so-called "jumbo" amendment tabled in Grand Committee. Looking at this amendment, I think that we can go back to square one and determine whether each of these is justified. Amendment No. 31—I think the same point applies to Amendment No. 35 with which Amendment No. 31 is grouped—deals with the right of the Secretary of State to deprive licence holders of compensation when rights are withdrawn. The basic question is: is that not an issue on which there ought, in all terms of natural justice, to be some sort of right of appeal somewhere?
	The idea that there should be a single arbitrator—it does not say who or how he or she would be chosen—presumably would be agreed between the parties, as would be normal. If there was no agreement, one would go to someone like the president of the Chartered Institute of Arbitrators to appoint one. It seems to me a matter of common sense that, when anyone has a power of this kind—such as the Secretary of State has here—not to pay compensation on certain grounds, those grounds are challengeable, they are disputable, and someone else should be able to determine whether it is a correct decision or not.
	When Ministers and regulators have decision-making powers on matters of policy, it is often inappropriate that there should be a right of appeal because it is a right of appeal from a specialised person with particular powers relating to policy to another person outside the circle. As I have said, that is completely inappropriate. But here we are not talking about appeals on matters of policy, but appeals on whether compensation should be paid on certain specified grounds set out in the statute, which is a matter of interpretation.
	Some form of appeal, perhaps that suggested in the amendment, seems quite suitable, while judicial review would be much too narrow and limited because presumably it would succeed only if one could prove that the Secretary of State was acting illegally or had not followed the right procedures. That seems inadequate for the matter raised by the noble Baroness.

Baroness Byford: My Lords, I too support the amendment moved by my noble friend. The noble Lord, Lord Borrie, was quite right to say that a good deal of work has been put into trying to find the appropriate wording. When looking around the Benches, I wonder whether we will have been successful, but we shall know that later.
	It is clear that there is a human rights issue here. We have not framed the amendment around human rights, but if someone is to be deprived of their rights to compensation currently in place, I would suspect that the Government have considered it and will have clarified that there is no human rights challenge. Ultimately, however, it is not right for the Government to be judge and jury over their own business. Given that this amendment has not defined or specified exactly who the person should be, it should be something that the Government will feel able to take on board. Provided that the person is acceptable to the two businesses or challengers concerned, then I see no difficulty with it.
	We had considered whether we should define the person, but at this stage we felt that the amendment might be more acceptable to the Government if it was left to the Secretary of State or to the Environment Agency to define the single arbitrator.
	I am very grateful to the noble Lord, Lord Borrie, for his strong support for this amendment.

Lord Whitty: My Lords, there may be something of a misunderstanding here. Where a licence is revoked or modified, compensation is payable for loss or damage under Section 61 of the Water Resources Act 1991. The same section also provides that any disputes over the amount of compensation, or whether compensation should be paid, may be referred to the Lands Tribunal. The tribunal is independent of the Secretary of State and is thoroughly experienced in carrying out such assessments. So in general a system of appeal is already in place.
	Clauses 25 and 27 set out a limited and statutorily defined set of circumstances in which compensation would not be payable after an abstraction licence is modified or revoked. If the clauses stand, it is not then a question of judgment or appeal to the Secretary of State, it is a matter of statute.
	The amendments seek to amend those clauses to install the principle that the holder of a new licence should not be deprived of abstraction rights without the possibility of a hearing. I accept that principle. However, the Water Resources Act already provides a mechanism for a hearing in such cases. This would take place when it was decided whether to vary or revoke a licence on the grounds set out in the two clauses.
	It is important to note that, contrary to the implication of the amendment, Section 61 of the Water Resources Act does not provide for the Secretary of State to make a decision whether to award compensation. As I have said, that would follow as a result of statute in the circumstances set out in these two clauses.
	The procedure for deciding whether to vary or revoke a licence is set out in Sections 52 to 54 of the Water Resources Act. Therefore, at the appropriate stage in the decision-making process there is already the chance for a full hearing as to the need for the revocation or modification of an abstraction licence.
	Whether or not the interpretation of those clauses is correct is a matter for judicial review, but it is not a judgment or a decision of the Secretary of State that can be appealed against, which I think is the motivation for the amendments.
	With that explanation, I hope that the noble Baroness will not press the amendments.

Baroness O'Cathain: My Lords, I am deeply unsatisfied by the Minister's response. I take his point that there is already access to judicial review, but that is both cumbersome and costly. The issue should be taken out of that area.
	I liked the comments made by the noble Lord, Lord Borrie, in regard to the Institute of Arbitrators. Whenever that body has been used in the past it has delivered answers that seem to satisfy everyone. A judicial review often gives a "yea" or a "nay" answer, which does not satisfy anyone—certainly not the people who feel aggrieved.
	There is a great feeling that the powers are stacked against the water industry. In those circumstances, I should like to test the opinion of the House.

On Question, Whether the said amendment (No. 31) shall be agreed to?
	Their Lordships divided: Contents, 40; Not-Contents, 84.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 32 not moved.]

Baroness Miller of Chilthorne Domer: moved Amendment No. 33:
	Page 32, line 21, leave out paragraph (c).

Baroness Miller of Chilthorne Domer: My Lords, I hesitantly return to the thorny issue of compensation. The amendment relates to the removal of compensation for the revocation or variation of time-limited licences that cause serious environmental damage. As it is drafted, the Bill allows the revocation or variation of any licence for abstraction, without compensation and without a time limit, in order to offer protection from serious damage to any waters or flora or fauna dependent on them.
	While that is a welcome provision, a number of environmental organisations feel there is still a loophole because a licence granted with a time limit can continue to operate even if it is causing environmental damage. Continued operation is likely to be the reality if compensation has to be paid under revocation or variation. That position was strengthened by the Minister's reply to a previous amendment—not the one on which we have just voted, but an earlier one. It is difficult to argue that abstraction should be allowed to continue under any licence if it has been confirmed that abstraction is causing serious damage to the environment.
	The Government may like to consider that the amendment is all the more necessary, given that the Bill's flexible approach may allow time-limited licences to be granted for quite long periods in some instances. I beg to move.

The Earl of Onslow: My Lords, it has been announced on the television that the office of Lord Chancellor should be abolished. Is it not totally disgraceful that no Statement has been made to Parliament and no discussion has taken place, and that an office of 800 years has been abolished without anyone debating it? At the whim of the Prime Minister, we have altered the constitution. Suddenly we are landed with this, and nobody knows what is happening. It is an abuse of process, of privilege and of office. What can we do about it? I therefore beg to move that the House do now adjourn.

Baroness Farrington of Ribbleton: My Lords, may I respectfully suggest to the noble Earl, Lord Onslow, that if he wishes to raise the issue in the Chamber, it would be wise for him to consult his Leader and Chief Whip and have a discussion through the usual channels rather than seek to use this extraordinary procedure now?

The Earl of Onslow: My Lords, if so, why did not the Government do the same and issue a White Paper showing what they are going to do to the constitution? It is a complete and utter disgrace. I have probably made my point. I am probably out of order. I am probably anachronistic. However, I feel so strongly about this abuse of the constitution, abuse of privilege and abuse of power—all the things on which Parliament is supposed to hold the executive to account. But no one turns a hair. I beg to move.
	Moved, That the House do now adjourn.— [The Earl of Onslow.]

Baroness Miller of Chilthorne Domer: My Lords, may I ask the House for some guidance on this issue? I moved my amendment, but the noble Earl, for understandable reasons, has moved another Motion. I am not sure which Motion we are considering.

Baroness Farrington of Ribbleton: My Lords, I think that it must be in order for us to take the noble Baroness's amendment which was before the House.

Noble Lords: Division.

Baroness Farrington of Ribbleton: My Lords, the Motion to adjourn the House must be a divisible Motion if it is objected to.

Lord Cope of Berkeley: My Lords, on the position of order, my assumption is that the Motion just moved by my noble friend is both debatable and divisible and should now be proceeded with. I think that the Deputy Speaker should put the Question, and if Peers wish to take part in a debate, we should proceed to debate the Motion on the lines that my noble friend proposed.

The Earl of Onslow: My Lords, the reason why I do this is not that I feel any great love for the noble and learned Lord, Lord Irvine, although I respect him. I do this not because I have any great love for any successor who may be appointed to his position. I do this because I think that it is completely disgraceful that a constitutional position and constitutional office should suddenly be abolished at the whim of a Prime Minister. All other constitutions have checks and balances in them. How dare he treat this House with such contempt? How dare he overlook the enormous services of someone like the noble and learned Lord, Lord Williams of Mostyn? How dare he behave as he has?
	We live in a parliamentary democracy. We live in a democracy honed by centuries of checks and balances. We cannot have arbitrary government, but this is arbitrary government at its absolute worst. That is what my forebear commanded a regiment of parliamentary cavalry for—to ensure that there was no arbitrary government. Suddenly we have arbitrary government at its absolute worst.
	In they come, summoned by the Whips. And they sit in a little bloc behind the Minister so they can all be seen on television.

Lord Borrie: My Lords, the noble Earl knows that I normally sit in this place. Noble Lords sitting in front of the noble Earl will confirm that I have sat in this place throughout most of the day.

The Earl of Onslow: My Lords, the noble Lord, Lord Borrie, has been glued to that Bench for as long as he has been in this House. I concede that that is his normal place. But suddenly a block of noble Lords appear opposite. They were summoned in by the Whips. We know the origin of the Whips. They were invented by Walpole who was a beagling fanatic. I refer to hunting whippers-in.
	I may be flippant as regards Whips and noble Lords opposite sitting in a bloc in the hope of being seen on television but I am not being flippant when I refer to the abuse of the constitution that we have just witnessed. I am not being flippant when I say that you cannot just change 800 years of British political history at the whim of the temporary—thank God—occupant of No. 10. All occupants of No. 10 are temporary.

Lord Cope of Berkeley: My Lords, unless anyone else wishes to contribute to the debate I should like to make a few points. My noble friend Lord Strathclyde, who would otherwise no doubt speak from this Dispatch Box, is at the moment taking part in a television programme in the north of England.

Noble Lords: Oh!

Lord Cope of Berkeley: My Lords, noble Lords may laugh at that but they know perfectly well that when one is involved in political life one takes on those engagements.
	There seem to me to be two aspects of what has occurred this afternoon. First, the Prime Minister reshuffled the Cabinet and moved some people from one department to another. He also moved some responsibilities from one department to another. That is conventional and has happened before. No doubt a transfer of functions order is required to put that into effect but it is within the prerogative of the Prime Minister from the Crown. Secondly, it appears from the television that the Government seem to have said that in future they will not allow the Lord Chancellor to fulfil the role that occupants of that office have fulfilled for many hundreds of years. In effect the Government are withdrawing from the House of Lords the services of the Lord Chancellor as presiding officer. That has potentially many consequences for your Lordships' House and for its future. Those are ultimately matters for the House. The House itself will, I believe, need to reach decisions about what to do.
	I am not sufficient of a constitutional legal expert to know whether primary legislation will be involved in the changes being made to the office of Lord Chancellor but I guess that it will be required. It will certainly be required with regard to the appointment of judges. I believe that a new statutory appointments commission will need to be set up. I am not sure how judges will be appointed in the meantime but no doubt we shall be told that.
	I am particularly concerned about the effect of what has happened on the House of Lords and its management. As I say, I believe that that is a matter for the House. I also believe that it is a matter on which we should have wide consultation and discussion, perhaps in the appropriate committees of the House or through some other mechanism. We shall need that consultation. It would be extremely helpful if the Government would say what they are doing, why they are doing this to the House of Lords, why this change is being made and what they intend to do about the consequences. The short-term consequences can no doubt be managed in some way or other but deep thought will need to be given to the long-term consequences as regards how the House of Lords will in future function.
	The noble and learned Lord the Leader of the House is present and can no doubt guide us on what is in the Government's mind on such matters, so that we can see about future aspects of the House of Lords and how a process of consultation and consideration is intended to be taken forward on what has happened this afternoon.

Baroness Miller of Chilthorne Domer: My Lords, I obviously regret that there are not more experienced and longer-serving Members of these Benches to comment on the matter. I think it regrettable that the announcement was not first made to the House, given that it was of so much importance to it. That mistake having been made, however, I do not believe that it would be in the interests of the House to debate it or to adjourn at this point, simply because of the lack of people whom I know would want to take part in the debate who had no idea that we would now be discussing something of such importance.

Lord Williams of Mostyn: My Lords, the noble Earl, Lord Onslow, said that I had been summoned in by the Whips. I was not. It would have been helpful to have been informed before he attempted his device.

The Earl of Onslow: My Lords, that is exactly my point. It would have been helpful if the announcement had not been sprung on us by television. What is sauce for the goose is, I am afraid, sauce for the gander.

Lord Williams of Mostyn: My Lords, I suppose that that is on the well known constitutional and moral basis that two wrongs do not make a right. At all events, I forgive the noble Earl his unusual discourtesy and shall attend to the facts. I offer a word of advice, if I may: do not believe everything that one hears on the television. I cannot remember how many people have told me today that I was either resigning or had already resigned. As Lord Denning famously said, I have all the virtues apart from those of resignation.
	The noble Baroness is quite right: this is not the occasion to discuss something of such importance to all of us. In my experience here, no one side and no one individual has a monopoly of regard for the House. However, I would like to read out the words that were distributed. They have not been properly commented on or properly disseminated. The title is:
	"Reform of the Speakership of the House of Lords".
	The noble Lord quite rightly said that there must be consultation, which I am sure will chime and echo in the minds of all noble Lords. I hope that I can say that I have never failed to consult on any issue of importance in this House. Frequently, we come to different conclusions, but I do not think that any noble Lord could say that I did not offer a consultative approach.
	The statement reads:
	"The Leader of the House of Lords will consult with the other parties"—
	that of course includes the Cross-Benchers and the noble and gallant Lord, Lord Craig—
	"and the House as a whole, on changes to Standing Orders enabling a new Speaker—who is not a Minister—to be in place after the recess".
	I come to the all-important phrase that governs all the rest, which is,
	"subject to the wishes of the House".
	What could be more reasonable and accommodating to the wishes of the House than that? As biblical scholars in my childhood as a Calvinistic Methodist always told me, look at the text and not the commentary.

Lord Denham: My Lords, I am not quite sure from what the noble and learned Lord said whether there will be discussions between the usual channels as to whether the abolition of the Lord Chancellorship should take place, or only as to what should be put in its place.

Lord Williams of Mostyn: My Lords, I am dealing with the question of the speakership of the House of Lords. I repeat that I have been required—willingly so—by the Prime Minister to consult all other parties in the House as a whole on changes to Standing Orders. Some would say—I could not possibly comment—that for a legislative chamber of what we all believe, I as much as any noble Lord, to be of importance to have no voice in choosing its own "speaker" is very curious. I am not sure that I know of any other Chamber in the world that does not choose its own speaker.
	It seems to me that most noble Lords—indeed, all of us here—want to make this House stronger, more effective and more efficient. This is an opportunity for us to do so. However, I shall read the words again. Obviously, I speak so softly that those words have not been understood:
	"subject to the wishes of the House".

Lord Denham: My Lords, I am sorry but I wish to press this point. The wishes of this House will be found out as to whether or not the office of Lord Chancellor should go. Is that right?

Lord Williams of Mostyn: No, my Lords. It is a perfectly plain constitutional principle: a Prime Minister may appoint members to his cabinet as he or she chooses, or not. As a matter of pure constitutional principle, to which I know the noble Lord is strongly wedded, the Prime Minister is perfectly entitled to propose these changes which will require legislation; that is to say, they will require the assent of both Houses, as is the case with all legislation.
	The specific point about the speakership of this Chamber is dealt with in the paragraph to which I referred. There is nothing new about constitutional change. The noble Baroness, Lady Thatcher, brought about a good deal of it.

Lord Trefgarne: My Lords, I have one small point to make. I do not necessarily disagree with some of the proposals contained in the document that I have only had a change to glance at. However, as my noble friend Lord Onslow said, it is regrettable that we were informed of government thinking in this matter by means of comment on television programmes and a press release that suddenly appeared on the desks of some noble Lords.
	There may be some important sense in the proposals contained in the document. I should like to reflect on those and think about them. I have long been in favour of the idea of having a separate supreme court to your Lordships' House, but I hope that the Government will reflect on how irked and irritated many noble Lords feel to learn of the Government's thinking in these matters in the way that I described.

Lord Williams of Mostyn: My Lords, I agree with the underlying theme of the remarks just made by the noble Lord, Lord Trefgarne. As he said, this is not the occasion to have a debate without having first reflected on these matters. If I understand the noble Earl, Lord Onslow, correctly, and he wished merely to register his point, I believe that he has done so. The sense that I have is that your Lordships would welcome a fully informed and reasoned discussion—indeed, I would hope a fully informed and reasonable discussion—when all those who have an interest can contribute.
	I take the point made by the noble Lord, Lord Cope. The noble Lord, Lord Strathclyde, was, as always, courteous enough to tell me this morning that he had a prior engagement. It is not a trivial one. He could hardly discharge it without discourtesy. The noble Earl has made his point: it has been heard and doubtless it will be reflected on. It is time to draw the line.

Lord Cope of Berkeley: My Lords, I believe that my noble friend has done more than make his point. He has done the House a service in drawing out of the noble and learned Lord the Leader of the House the description of what it is that the Government have in mind and how they propose to take it further. However, it would have been better if that explanation had not been dragged out of the noble and learned Lord by the initiative of my noble friend. It would have been preferable if the House had been given this information more directly.
	I believe that I am right in saying that the noble and learned Lord was reading from a press release from No. 10 Downing Street. Therefore, it would be extremely helpful if, at the very least, copies of that document were made available in the Printed Paper Office as soon as can conveniently be arranged to enable noble Lords to study not only the words read out by the noble and learned Lord but also the surrounding proposals.
	We are discussing a very profound change, not only to the constitution but also to the management arrangements of this House, which it is proposed to alter in the future. I believe that I am right in saying that the Lord Chancellor is the second person in the land after Her Majesty the Queen. That is his position. Simply to announce on television that the position no longer exists, and not to tell this House, which will be so deeply affected by this decision in the future, was a discourtesy of a kind for which the noble and learned Lord is not normally responsible. As he himself claimed, he does indeed consult on many matters, and it is very important that on this matter there should be careful consultation. I am grateful to the noble and learned Lord for at least saying that that will be so. He explained that he has taken his instructions from the Prime Minister. I accept that. But it is a matter which deeply concerns the House as a whole, and the House has not been courteously treated this afternoon.

Lord Williams of Mostyn: My Lords, I think that the noble Lord is in error. The second most important person in the land is Williams—Rowan Williams, of course, the Archbishop of Canterbury. Of course a copy of the documents will be made available. But it is idle to attempt to have a debate on matters of importance when very few noble Lords are present. I respectfully suggest again that we ought to draw a line under this. I have taken note of what has been said and shall give it all appropriate attention.

Baroness Byford: My Lords, perhaps I may intervene. We were in the middle of a debate on the Water Bill. Two matters distress me enormously. The first is that this has happened in the way that it has. Whatever the noble and learned Lord the Leader of the House has said, I hope that he does feel that it was perhaps an unwise way to treat this House. Secondly, his colleagues on the Benches behind him were very flippant. That is an attitude that is regrettable. To laugh at the noble Baroness, Lady Miller, as they did—one or two are shaking their heads, but some Members on the Benches opposite did—when she plainly explained that she was a comparative newcomer to the House and was seeking guidance, was a disgrace. I wish to record my regret on that point.

Baroness Farrington of Ribbleton: My Lords, may I just explain? I know that my colleagues were expressing support for the noble Baroness, Lady Miller of Chilthorne Domer.

Baroness Byford: My Lords, I am being told to leave the matter alone. So often in this House we are told to leave matters alone. There is a time and place for everything. The way in which this news has been dealt out to us in the middle of a debate is appalling. I want to express my view on that and to express my distress at the attitude of Members opposite.

The Earl of Onslow: My Lords, the noble and learned Lord gets to his feet and explains why things should change. I do not object to change. In fact, he and I voted for sensible change together—we Welsh. What I object to is the way in which this has been done. By all means, appoint a new Lord Chancellor; then, you say: "We have proposals to do things in this sort of way". The matter is then debated properly, people have their say and it goes through the normal process.
	What offends me very deeply is the high-handed, almost Saddamesque way of treating the British constitution. I do not think I have ever been so angry in the 30 years I have been in this House. I love this House. I love the constitution of this country. I love a balanced Whig arrangement. But to be treated like this! A Member on the Benches opposite said in a barracking way, "Shut up!"—in that lovely, old-fashioned House of Commons tradition that we all love and revere, but let us please not treat the constitution in the way it is being treated. Let us not treat this House in the way it is being treated. Let us not just play Pooh-sticks with 800 years of British liberty. I wish to test the opinion of the House.

On Question, Whether the said Motion shall be agreed to?
	Their Lordships divided: Contents, 23; Not-Contents, 81.

Resolved in the negative, and Motion disagreed to accordingly.

Baroness Miller of Chilthorne Domer: My Lords, I had concluded moving Amendment No. 33 and had just sat down.

Lord Whitty: My Lords, I apologise to the noble Baroness. The intervening excitement took away from the fact that she had finished speaking. No other noble Lord appears to wish to speak.
	Amendment No. 33 deals with Clause 27, which introduces a new power for the agency to revoke, after 2012, any permanent licence causing serious damage to the environment, without payment of compensation. There would be a right of appeal to the Secretary of State or the National Assembly for Wales.
	This amendment would extend the provision to some time-limited licences. However, such time-limited licences will already have been subject to rigorous scrutiny by the Environment Agency when they were issued. It is fair to say that the holders of such time-limited licences are entitled to confidence in the agency's decision. It is right that the agency, in turn, should carry the responsibility if the decision subsequently requires review before the licence expires.
	There should be no cases where such serious environmental damage arises from a time-limited licence. The essence of a time-limited regime is that it facilitates gradual small-scale adjustments needed to deal with changing environmental factors such as climate change. In the unlikely event of serious damage arising from a time-limited licence that was based on Environment Agency conditions, it is right that the holder should be entitled to receive compensation on the basis of a licence that was granted by the Environment Agency's decision in the first place.
	Government policy is to encourage the holders of permanent licences to agree to their voluntary conversion to time-limited status, as we debated earlier. One of the attractions of doing so is that holders would have both notice and compensation were those licences to be revoked. The amendment would cut across the incentive to convert to time-limited licences. For those reasons, I hope that the noble Baroness will not pursue the amendment.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. It was much clearer than his reply to a similar amendment in Committee. I hope that his optimism about people converting to time-limited licences is borne out. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 34:
	Page 32, line 26, at end insert "; and
	( ) the licence holder has been informed of the nature of this serious damage and allowed a minimum of six months to devise a means of reducing it to the point where it is no longer serious."

Baroness Byford: My Lords, this amendment requires that a licence holder has been informed of the nature of the serious damage and allowed a minimum of six months to devise a means of reducing it to the point where it is no longer serious.
	Will the Minister define "serious" as used in Clause 27(1)(d)? In Committee, he said:
	"The definitions of 'serious damage' under this clause and elsewhere will be set out in detailed guidance".—[Official Report, 3/4/03; col. GC 178.]
	After our discussions earlier today, he will not be surprised that I shall push him to define it here rather than wait until regulation. I should hate to think that the comment is founded upon the Government's inability to provide a definition—though I note that Hansard uses the plural, "definitions". If it is not possible for the Minister to tell us today what is meant, I have no doubt that it should be done later, because it affects the clause directly. The clause would otherwise become a meaningless jumble of words, the net effect of which is to allow the authorities to revoke abstraction rights without compensation.
	In reading Hansard, at cols. GC 176–179 of the Official Report of 3rd April 2003, I was struck by the stress placed by the Minister on the costs to the agency. He confirms that compensation is such a cost that it is part of the administrative cost, and that it has to be recovered if the agency is to fulfil its duty of recovering all its costs from abstractors. He extols the Government's clause because it,
	"limits the number of occasions that compensation would be payable. Therefore, it would reduce the degree to which any charge would fall on other abstractors".
	Yet, two sentences later, he says:
	"The clause . . . would reduce the burden on the Environment Agency's budget because compensation would not be payable in those circumstances".—[Official Report, 3/4/03; cols. GC 177–178.]
	I am sure that the agency has formulated a definition of "serious"; and that it must at least have estimated the number of abstractions that are causing "serious damage" and should not attract compensation. Will the Minister tell us whether that is a matter of five, 10 or 20 claims, and the estimate of revocations that under the clause would not qualify for any payment? Will he also provide the estimated savings that will result?
	I have again received a briefing from the National Farmers Union, which states:
	"The use of the phrase 'serious damage' is not yet strictly defined and, as such, the NFU feels that abstractors are unable to make a judgement on whether their present abstraction activities are causing this level of damage and what remedial action can be taken. The withdrawal of an abstraction licence should surely be the ultimate sanction, backed up by robust and transparent evidence of the quantifiable damage, especially when the right of the abstractor to compensation for such an action is to be questioned. The NFU welcomes the suggestion that an arbitrator should be employed to settle any dispute arising from the withdrawal of an abstraction licence(s) under those circumstances".
	I beg to move.

Lord Hardy of Wath: My Lords, I am uneasy about the amendment. If it would mean that damage, which could be serious, could continue for six months—therefore having an even more serious effect—I should be uneasy if it were carried.
	I have no commercial interest, but I am involved in several conservation organisations, including the Yorkshire Wildlife Trust, of which I am president. I am aware that in many parts of the country, a great deal of damage has been done, with the loss of wetland habitat during the past 40 to 50 years. If present levels of abstraction of water continue, damage will continue in many parts of the country.
	To allow serious damage to continue for six months—or even six days—can be harmful. Of course, there may be argument about what is serious. Some members of the National Farmers Union may not consider certain action serious, where ardent conservationists would. I trust that the Government will not be generous to the amendment, if it means that damage that is recognised and understood is allowed to continue while someone is given six months to find a way to reduce the level of damage to slightly less than it was before.
	One major purpose of the Bill is to serve the cause of conservation and the English environment. That needs protection; as I read it, the amendment could be utterly counterproductive.

Lord Whitty: My Lords, I agree with my noble friend Lord Hardy that when "serious"—however that is defined—damage is caused or threatened, to give six months leeway is not appropriate in any circumstances. In any case, there is a slight misunderstanding here. If the aim of the amendment is to try to move to a more voluntary system of reducing or avoiding serious damage, it would not achieve that.
	Clause 27 as drafted will come into operation only when a damaging licence has already been revoked. It deals with the consequential issue of compensation. It also assumes that that revocation will have occurred only when the damage has actually been done, whereas, on occasion, revocation will occur where damage is threatened, in order to prevent such damage. As my noble friend Lord Hardy said, were we to allow another six months, it is even more certain that the damage would either not be avoided or would have even worse effect.
	The clause will have no effect until after July 2012. We hope to have dealt by then with many, if not most, of the problems associated with damaging licences. We also envisage that, by then, the most significant licences will have transferred from being permanent to being time-limited and subject to the sustainability criteria for the longer term. In those circumstances, with a time-limited licence, the clause would not apply. As I said in the debate on the previous amendment, the fact that the clause would not apply should be seen as an incentive to transfer from a permanent licence to a time-limited licence.
	The clause would be used only as a last resort and only after 2012, if remaining permanent licensees were causing serious damage or if it could be shown that they would cause serious damage. The noble Baroness challenged me to define "serious". She cannot be serious—in the sense that the term "serious" is used throughout legislation, and, should further elaboration be used, it is always provided in guidance. That will be the case here. There will be different circumstances and different sorts of serious damage that cannot be defined in the Bill, but examples of the kind of damage that we are talking about can be given in guidance.
	I hope that, with the description of the limited circumstances in which it would arise and no compensation paid beyond 2012, the noble Baroness will be reassured that it is not a threat to most licensees in any circumstances. If there is a problem with permanent licensees after 2012, it is right that the Environment Agency should have the right to intervene without incurring claims for compensation. Allowing another six months before the revocation became effective would aggravate the situation, rather than resolving it.

Baroness Byford: My Lords, I thank the Minister for his response. In a minute, I shall return to the point made by the noble Lord, Lord Hardy of Wath. By not defining "serious" or not giving some guidance, the Government raise the question of how judgments are to be made if there is no definition of anything. I hope that I can tempt the noble Baroness, Lady Miller of Chilthorne Domer, to add it to her list of definitions, if we manage, at some stage, to get some guidance on it.
	The Minister said that the clause would not come into effect until 2012. I accept that, but we are dealing with the Bill now. We are not dealing with what might happen in 2012. We are dealing with the Bill as it is today. If the Government wanted to, they could introduce a sunset amendment to make sure that we had time to find out exactly what sort of definition we wanted. I am not exactly thrilled by the Minister's answer, however kindly he put it. I was serious about "serious", and I hope that, in the mean time, we will have a chance to revisit the matter.
	I must say to the noble Lord, Lord Hardy of Wath, that, earlier this afternoon, we considered the whole question of the need to protect the environment. I have said clearly that we would not support any damage being done. It is a question of where the balance lies. If some damage is being done and is seen to be done, it should be stopped straightaway. That is why the degree of seriousness is important. If the damage is acutely serious, it must be dealt with straightaway. There would be no question that my amendment would detract from that. If it is serious but could be put right in, say, a month or two months—

Lord Hardy of Wath: My Lords, I thank the noble Baroness for giving way. She said one month or two months; the amendment states a minimum of six months. That suggests that for a minimum of six months damage would continue or the consequences of damage would be even further extended.

Baroness O'Cathain: My Lords, perhaps I may just suggest to the noble Lord that there are issues here concerning the environment which one could not actually see. If the damage was not very serious—as alluded to by my noble friend—there could be a period in which it would not be seen in less than six months. For example, there could be a seasonal effect. We just cannot be hung up on these phrases, but certainly, at the beginning of today's discussions, we were all of one mind about the problems of the environment and the necessity to keep that central in our minds.

Baroness Byford: My Lords, perhaps I might finish what I was trying to say. This is my difficulty with the definition of "serious". If the damage was what I would call a serious issue that, let us say, could be dealt with within a month, or that the Environment Agency was happy that it was dealt with in the immediacy and then took time to correct the rest of it during the following months, that is the thought behind this amendment. It is not saying to whoever it might be, "You have got six months and you needn't do anything about it at all". I think that the noble Lord has slightly interpreted my amendment in that way. It certainly is not, in any way, meant to do that.
	That is why I come back to the need to define "serious". I believe that it is a serious problem, but I obviously do not intend to divide the House at this time of night. That would be very serious. I think that it is something which needs to be addressed; for us to be able to look and say, "How can we best help preserve our wildlife and everything else that goes on, yet not cut the ground underneath people but give them the opportunity to put something right if it is being dealt with in a way which the Environment Agency considers is suitable". That is my dilemma and why I moved this amendment. I hope that the Government might give further thought to it before we meet at Third Reading. If no more noble Lords have any comments to make, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 35 not moved.]

Baroness Farrington of Ribbleton: My Lords, perhaps we may complete Amendment No. 36 because some of the speakers for the Unstarred Question debate are not in the Chamber. We are unable to start until 7.30 p.m. if they are not here.

Baroness Miller of Chilthorne Domer: moved Amendment No. 36:
	Before Clause 28, insert the following new clause—
	"GENERAL PROVISIONS WITH RESPECT TO WATER
	In section 6(2)(b) of the Environment Act 1995 (c. 25), at end insert "in particular the efficient use of water by all abstractors"."

Baroness Miller of Chilthorne Domer: My Lords, Amendment No. 36 is grouped with the response of the Government to this amendment—that is, Amendment No. 160—and our new Amendment No. 160A. It does not appear on the grouping list but, with the leave of the House, it would be helpful to discuss it with the other two amendments.

Lord Whitty: My Lords, with the leave of the House and the agreement of the noble Baroness, it would be helpful if we could degroup Amendments Nos. 160, 160A and 160B. There is an amendment in her name to my amendment and an amendment also, of which I was not fully aware earlier today, tabled by the noble Baroness, to my amendment. When I come to deal with the amendment tabled by the noble Baroness, it would be better to move to something in the area which is covered by those three amendments rather than pursue this one. But it would be better to do that in its place when we reach it on another day.

Baroness Miller of Chilthorne Domer: My Lords, in view of the confusion as regards amendments and the grouping list, I consider that we would be better served to leave this group for another time.

Baroness Farrington of Ribbleton: My Lords, I beg to move that consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.

Developing Countries: Poverty

Baroness Whitaker: rose to ask Her Majesty's Government how they can help the developing countries in poverty which lack strong funding relationships with donor countries or international institutions.
	My Lords, when I went to Niger, it was the second poorest country in the world. Its per capita income was 200 dollars. The adult female literacy rate, a strong indicator of the basis of development, was just over 8 per cent. Yet it receives only 25 dollars in development aid per person per year. France, the main donor, dropped its aid to Niger from over 115 million dollars in 1997 to under 40 million dollars in 2001.
	Mali's income is 360 dollars and its aid 36 dollars per person per year—a bit better, but that is mainly in aid tied to French products, and Mali is democratic and pretty low on corruption. As Paul Collier and David Dollar say in a very interesting book on aid allocation, which I shall refer to again, Mali's ability to save and invest, evident from its reasonable standard of governance, which I also saw personally, may be undermined by its poverty, which is so great that foreign investment is deterred. Surely that is a good case for aid to encourage economic growth.
	Last autumn I went with UNICEF to Laos, not quite so far down the aid agenda, but with a particular problem in that there are unexploded American bombs and landmines throughout. US ordnance-clearing aid, I was told, equates in about a year only to what was spent in one day on aerial bombardment. Total development aid went down by a quarter over the years 1999 to 2001 and, as I saw, the paucity of any kind of paid work meant that hundreds of its young people were sucked into exploited labour and prostitution in neighbouring Thailand. UNICEF, which took me there, does a magnificent job in helping to recover and train these children, but the inability of the Laos Government on its own to create economic growth and employment means that trafficking happens over and over again, often to the same children.
	Should we bother about gaps in aid? After all, economic growth is what lifts countries out of poverty and foreign direct investment and remittances from migrants both do more for economic growth than aid does. But it is of course aid which helps ensure the basis to attract that investment, a healthy and literate population with a modicum of good governance and a minimum of corruption. The findings of Collier and Dollar show that poor countries are held back by a governance gap rather than a financing gap. DfID has produced a very interesting booklet called Promoting Institutional and Organisational Growth to disseminate just that expertise.
	I do not need to rehearse the links often described in your Lordships' House between extreme poverty, armed conflict with its preponderance of civilian casualties, unmanageable large movements of refugees, mainly to other poor countries, destabilising them, as in Cote d'Ivoire, people smuggling and trafficking, and organised crime. It is in the interest of the most narrowly conceived external policy to reduce extreme poverty.
	There seem to be three major reasons why some needy countries miss out disproportionately. I am most grateful to Peter Grant of DfID for his illuminating discussion of these. First, proportionate assistance to a large, poor country could skew the budget of any donor. Bangladesh receives only nine dollars per head per year in development aid as a result. One must ask: is the World Bank's cap on absolute sums right?
	Secondly, one of the world's big multilateral players, the European Commission, does not target poverty. Less than 50 per cent of its development assistance goes to low income countries. The EC favours its own back door, East and Central Europe and North Africa. Thus it does not take a global view even of the situation of Europe. I congratulate my noble friend on the Government's pressure for the Convention on the Future of Europe to make poverty eradication the principal objective of EU development policy. Can she say what progress is being made?
	The third reason is history. For instance, the UK aids the Commonwealth; the French do most in their former empire. There is a point in that. If there are links and networks, donors have a better chance of making aid well-informed and making it work. But of course it is partial.
	Indeed, some bilateral donors who do not act from a post-imperial sense of responsibility appear to take the eradication of poverty less seriously than other objectives. The USA still goes in for tied aid which hugely benefits its own producers at the expense of best value and local procurement for the recipients; or it furthers political objectives, as in the Middle East and, indeed, in central and eastern Europe. Let us hope that President Bush's most welcome commitment to the relief of HIV/AIDS in Africa is a new departure.
	In any case, history can do little for countries with no conqueror, such as Ethiopia; or for those whose conqueror was impoverished by its own imperial efforts, such as Angola. It is all a bit of a lottery. And that lottery is also compounded, for when countries have sclerotic or corrupt governments it is hard to know how to make aid work. Or when their intellectual and professional resource leaves or is driven out or annihilated, as in parts of south-east Asia, their capacity for nation building is weak.
	Riches in the form of natural resources can actually be a curse in that the greed they inspire can destabilise an immature polity. Poor countries are prone to war and rich countries do not like to pour money into arsenal economies. The strategic importance of a country may make its "aidability" strangely fluid. There was quite an increase in US aid to Guinea when a seat on the Security Council came its way.
	NGOs do wonderful work in these areas but their resources are tiny compared to governments.
	Do the UN, the World Bank, the IMF, regional development banks, the EC and donor governments need to work together more to share out aid better? That would be better done on a rights basis in any case, but that is for another debate. Would it not be better to have more representatives of developing countries in the multilateral organisations? The Government—DfID—have appreciated that there should be a proper means of funding the attendance and advocacy capacity at the WTO of countries too poor to do it themselves. Should this be extended to G8, the IMF, the World Bank and other decision-making bodies?
	My right honourable friend the Chancellor proposed a doubling of aid to developing countries, innovatively financed by an international financing facility. This gained ground at Evian. How should it be distributed?
	Finally, a few other things that the international and regional institutions might focus on: the striking results from concentrated aid in poor countries with good management; the enormous importance of trade for growth and the consequent message that multilateral organisations might link-in aid more with efforts on macro and sectoral policies to improve market access; their firmer independence from big power political influence, following Joseph Stiglitz's interesting account of the need to reform.
	I have not offered developed solutions. My purpose is to air a problem so that more expert heads can do a bit of brainstorming over the best way forward. I therefore look forward very much to hearing the distinguished speakers to follow and to the response of my noble friend the Secretary of State.

The Earl of Sandwich: My Lords, the noble Baroness has certainly aired the problem. My congratulations to her for asking one of the most fundamental, almost unanswerable, questions: why can we not help the very poor? I expect the Government to admit that they cannot, because plainly we will not meet the millennium development goals. Many of the poorest—the figure used to be as high as 40 per cent—are out of reach of government services. So the simplest answer is: we cannot help those we cannot reach if we are using a government structure. But there is another version of this argument which I heard, perhaps surprisingly, through the organisation CARE International—that is, we cannot help the helpless. Unless there is a sustainable project, aid will be useless. It will be like pouring money into sand.
	I know CARE International has successfully planted trees in Niger in very difficult conditions, but only because local people look after the trees and keep the goats off. This is now the fashionable concept of sustainability, which of course requires a process of evaluation. It guides governments and NGOs alike; it pleases auditors, trustees and donors. Yet it can also be a useful means of avoiding our obligations to reach the very poorest. Can one imagine poverty reduction today without rapid rural appraisals, household surveys, livelihood monitoring or coping mechanisms? There is a complex apparatus of aid which, while suiting donors and some governments, encumbers the poorest countries most.
	We donors meet in various disguises, as the G8, the EU, the DAC/Paris Club, World Bank, IMF, or via one of the UN agencies. When the host countries admit that they cannot cope with the jargon, let alone the policies, we send out technical experts and call it capacity-building. They are the new aid bureaucracy. They are expert in transparency, debt relief, good governance, conflict resolution, and so the list goes on—laudable ambitions, trumpeted by the international financial institutions on our behalf.
	At the same time, these countries are being saddled with poverty reduction strategy papers—the new form of structural adjustment which is the latest straitjacket of development because governments have little choice if they are to receive aid such as IDA lending or, still more, budgetary support. The influence of donors through this process cannot be exaggerated. Some 26 countries have already published the PRSPs and another 20 have published interim papers. Over half the countries regarded as the poorest are benefiting from IDA lending.
	In the past, donors have been frustrated by host government departments, especially the red tape involved. In the end, such departments were bypassed. The more powerful aid agencies like UNICEF set up their own separate projects with their own identity, infrastructure, even territory. Any new funding—we have the example of HIV/AIDS today—risks introducing such an empire of aid-giving, sometimes regardless of, and even in competition with, the existing, usually rather fragile primary healthcare structure.
	I admire the commitment of many individuals in the UN and the larger NGOs. I count friends among them. But I have come to recognise how well our own society is served by these well paid aid workers, consultants and experts, not to mention the drug companies and the manufacturers, while the local communities they were assisting have often, in the end, been left to fend for themselves.
	This is where aid funding has gone wrong. And DfID, to its credit, has recognised the limitations of such assistance. In countries where it has developed a strong aid partnership, it has moved towards programme aid and budgetary support so as to reinforce government services. Where possible, it has strengthened the capacity of the local NGOs and the more rigorous areas of civil society, such as the judicial system in countries like Rwanda and Uganda. Yet it cannot extend this support to the poorest countries or those communities in conflict, as in Nepal, Sudan, or even parts of India, which still contain some of the world's very poorest. Using NGOs will not be enough to reach the very poor, except for limited operations, and in some areas where they are well integrated in local civil society.
	One main advantage of the PRSP process, which I readily accept, is that it requires the participation of civil society. Preliminary research by the Overseas Development Institute shows how intricate the detail of the process has become. It is difficult to monitor the extent and degree of public participation, but that is a task that has to be done.
	One way of reaching the very poorest, which has been explored by Christian Aid in an internal discussion paper, may be through decentralisation and devolution using the PRSP process. Much could be achieved through a discussion about effective participation of civil society in local decision-making alongside elected representatives. As I frequently do, I am thinking of African countries in that context. Some research has been done into participation in countries such as Bolivia, Uganda and Malawi. It would be interesting to know from the noble Baroness whether the Government have explored the issue in the context of aid funding within the PRSPs.
	One country with a light touch, where I believe that these ideas could be explored, is Mozambique, where the department is working at various levels. With donor encouragement, Mozambique has embarked very confidently on its own PRSP, know as the PARPA. It is designed to ensure that civil society is fully involved, that local NGOs are supported, and that an emerging democracy ensures accountability, transparency and improved fiscal arrangements as well as good governance—whatever that word means precisely.
	So far, so good. However, there are strong vested interests in those countries. One is the presence of foreign companies, notably the shareholders in Mozambique in MOZAL and the South Africa rail link through the Maputo corridor. That will inevitably reinforce power in Maputo at the expense of the north, which is a classic divide in many countries. Human rights NGOs, rural development agencies and a few opposition politicians will have a hard time representing minorities and communities, some of which will run counter to government doctrine.
	Mozambique is a country crying out for a stronger media and civil society to protect the new constitution and the interests of ordinary people and prevent a return to conflict. The building of an aid bureaucracy, unless it can reinforce local civil society and local government in parallel, outside the capital, may be identified with the centre and so prevent a new society from emerging.
	Finally, I fully agree with objective 1e, which the noble Baroness mentioned, that EU aid to the low income countries should increase to 70 per cent by 2006. However, we are still a very long way from that. I congratulate the noble Baroness on her new departmental report, which is readable and gives an honest account of such objectives, thereby helping parliamentarians.

Lord Hannay of Chiswick: My Lords, the Question on the Order Paper draws attention to a very real, but not much noticed or remedied problem—the plight of the considerable number of developing countries, many of them small in size or population, which simply slip through the net of support for lack of strong funding relationships with donor counties or international institutions. Some of those countries have found themselves neglected because they do not fit into the pattern of post-colonial relationships with former metropolitan powers, which are still quite influential; others because of the lack of a strong, purposeful regional grouping to which they can belong and from which they can draw help and advice; and others—but here the attribution of cause and effect is not easy or uncontroversial—because their poverty has led to a breakdown of civil society, of law and order and, in some cases, of any vestige of central government at all. In those cases, the international community has despaired of being able to pursue any development policies beyond simple humanitarian relief. I know that there is an argument that says that some of these countries have got there because of conflict. I do not wish to attribute precisely the cause and the effect. The outcome is, alas, all too clear.
	Examples of those phenomena are not hard to find, particularly, but not exclusively, in Africa. Afghanistan, before Al'Qaeda and the Taliban put them back on the development community's map, was one of them. Somalia was, and remains, another—as does Liberia. Rwanda and Burundi before their experience with genocidal strife were precisely in that situation. All these were countries where the main donors had largely given up or had never been that much interested in the first place. But look at the consequences, not just in terms of human suffering and loss of life, but also of regional destabilisation—in Central Asia, in the Great Lakes region of Africa, in West Africa and in the Horn of Africa, for example; and look too at the cost to aid programmes of redressing this neglect when eventually we all got round to doing something about it; and look too at the havens that have been and still are being provided for terrorism. That is surely enough to show that the cost of failure and neglect is very real and that it falls not only on the countries concerned but also on the wider international community.
	Of course I am not suggesting that nothing has been done, or at least attempted, to deal with the problems of these countries. The United Nations, with the various initiatives directed at the LLDCs—the least less developed counties—has tried; so has the Commonwealth with the focus on its smaller, less viable members; and NePAD—the new African initiative which was debated in this House a couple of weeks ago—is also trying to address the same problem. But what I fear we do have to accept, if we are being honest with ourselves, is that none of these initiatives and efforts has been particularly effective; and none has even begun to get to grips and to eliminate the problem. So we do, surely, need to think again; to analyse carefully why efforts so far have failed in these sorts of countries; and to consider whether we cannot find new remedies.
	One problem, I fear, is the tendency of all aid administrations, and many development economists too, to concentrate their attention and efforts on the larger problems and the larger countries. There are perfectly respectable arguments for doing so. It is not difficult to demonstrate that concentration of really substantial resources on a limited number of recipients brings better results than what would be pejoratively described as a scattergun approach. But such concentration comes at a cost, as we have seen, and a cost that can be very heavy. I would welcome some comment from the Secretary of State, whose presence to reply to this debate I warmly welcome, on this unavoidable tension and on how DfID sees ways of resolving it.
	Where should we be looking for remedies? Clearly in the trade field, where the World Trade Organisation's Doha development round is in full but not altogether promising swing already. It may seem a bit quixotic to think of some of these neglected countries benefiting from international trade at all; but, if we take that view, they will be condemned to eternal dependence on aid, and that will be a disaster. So we must help them build capacity in the trade field and devise even more ways of ensuring that what they do produce reaches our markets and that they do receive a fair return for it.
	Secondly, we must act on debt, where we are often—and we need to recognise this—dealing with countries whose ability to undertake sustained programmes of structural adjustment is very slight. Thirdly, we must do what we can to strengthen regional and sub-regional organisations which can often provide more politically acceptable assistance than can the main donors and the major global institutions. Fourthly, we must work to make the European Union's aid effort—which continues to grow steadily, and will now increasingly do so with the enlargement of the new members which have not hitherto been much involved in the aid business—more effective and more sensitive to the problems that this short debate has highlighted.

The Earl of Listowel: My Lords, I, too, thank the noble Baroness, Lady Whitaker, for providing us with the opportunity to debate this important issue.
	I shall concentrate my remarks on the situation in Angola and on the case for reviewing our donor relationship with that country, particularly in regard to the urgent and immediate need to prevent the spread there of HIV/AIDS. At the same time I recognise the need to avoid colluding with a government who historically have not attended to the needs of their people.
	I am informed in correspondence with the Minister that the rate of HIV/AIDS infection in Angola is in the region of 5.5 per cent. That is an approximate figure as statistics are very hard to glean in that country. That contrasts with an incidence of over 20 per cent in several neighbouring southern African countries. According to the Children on the Brink report published in 2002, a joint USAID/UNICEF/UNAIDS publication, there were 84,000 AIDS orphans in Angola; in other words, children who have lost either one or both parents to AIDS. The figure could double by 2005 and jump to almost half a million by 2010 if no action is taken to reduce HIV infection. There is a brief window—which I shall describe later in more detail—to minimise the impact of HIV/AIDS on Angola.
	Angola is endowed with large resources of oil and diamonds. It has had a thriving agricultural economy in the past and is well watered. Its revenues from oil are set to double over the next five years. At the same time Angola is recovering from over 25 years of civil war. About 500,000 UNITA soldiers and their families are being resettled. Hundreds of thousands of refugees are returning. More than a million people driven from the land by war are returning to their homes. Last year's cease-fire precipitated a further humanitarian crisis as areas that were previously inaccessible were opened up. Last year two million Angolans were dependent for survival on food from the World Food Programme.
	As the noble Baroness, Lady Whitaker, mentioned, it appears that Angola's mineral wealth has had a negative impact on the prosperity of the general population. Lacking strong rule of law, oil prospers only those powerful enough to command its revenues. The UK and the international community are loath to assist Angola financially as Angola has the means to meet her own needs. Should one provide financial assistance to a wealthy nation whose people suffer from poverty? The UK's answer has been a gentle affirmative. We are Angola's largest bilateral donor, providing support for the Luanda Urban Poverty Project. We meet the poorest people's need for clean water and food security in such a way as also to promote grassroots co-operation and grassroots political awareness. Recently I visited a co-operative which the Luanda Urban Poverty Project supports. It comprises a group of women who buy food together and, therefore, obtain it at a reduced price. There is a gradual building of political awareness in such deprived communities.
	At the same time Her Majesty's Government urge the Government of Angola to be more transparent in their financial dealings. International partners and international institutions sustain that pressure. Her Majesty's Government have emphasised the key role that they see for Angola in supporting the development of Africa. The noble Baroness demonstrated the importance she attaches to Angola by making two recent visits to that country. However, for all the reasons I have given, Her Majesty's Government are reluctant to accede to Angola's wish for an early donor conference, perhaps in September of this year, to support projects to consolidate Angola's peace.
	HIV/AIDS is set to sweep through Angola as it has through its neighbours. Some 200,000 refugees are set to return from Zambia, a country with a seroprevalence rate of about 30 per cent. Long-distance lorry routes are opening up as mines are cleared from the roads in the country. They convey lorry drivers from Namibia and southern Africa, where there are very high rates of HIV/AIDS infection. More than 75 per cent of Angolans are under 25. It is a very youthful nation, and it is the young who are most likely to contract and transmit the disease.
	The president of Angola has put his personal authority behind the fight against HIV/AIDS. In that, he has shown leadership that, sadly, many of his peers across sub-Saharan Africa have lacked. The media in Angola are alive with hard-hitting campaigns on HIV/AIDS. Although the response of the Angolan Government has been disappointing in the past, I warmly welcome the recent news that the first phase of the new national strategic plan has just been completed. I am also pleased to learn that the government of Angola have submitted an application to the global fund for AIDS, TB and malaria for 58 million dollars. The government of Angola have committed their own funding in the action against AIDS. Sadly, that is rather an exceptional case, but it is to be welcomed.
	The current situation could not be more critical. Put very simply, there are large population movements across and within Angola, and there is little awareness of HIV/AIDS outside Luanda. Condoms are scarcely available in the rural areas. Unless immediate action is taken, Angola may shortly engage in a second civil war, a war against AIDS that may negate any peace dividend and that may keep Angolans in extreme poverty for years to come. Will the Secretary of State assure the House that Her Majesty's Government recognise the current brief window of opportunity to minimise the impact of HIV/AIDS in Angola?
	What more financial assistance might Her Majesty's Government consider providing to Angola to minimise the inevitable rise in HIV/AIDS infection? Evidently, there is the need to inform the population and increase access to condoms. That must be the first priority. However, HIV/AIDS is also a reflection of poverty, the inadequate health systems, the social injustice that obliges women to provide sexual services to men on a large scale, and the lack of a rudimentary education.
	Children need adequate health systems so that their infected parents can endure long enough to see them into adulthood. Infants need to be protected from mother-to-child transmission by effective drugs, advice and healthcare. The extended families and communities in which orphans are raised need to be supported. AIDS sufferers need access to counselling, drugs and healthcare. It is very sad to visit such sufferers in Angola and see what little support there is for them.
	Will the Secretary of State use every opportunity for discussion with the government of Angola to encourage their work in that area? Will she ensure that HIV/AIDS permeates all our responses and support in Angola? Furthermore, will she use dialogue with the government of Angola to ensure that implementation takes place of the strategy that they have now produced?
	My time is at an end. I look forward to the Secretary of State's response.

Lord Desai: My Lords, I thank my noble friend Lady Whitaker for having proposed a fairly precise subject. It is not a general question about development aid or rural poverty, but is specifically about countries that lack a funding relationship with donor countries or international institutions.
	In a way, it is like the problem that we often face; namely, of helping poor people within our own country. We try to do it through tax credits, or through other benefits. But if someone is not in the labour market and cannot qualify for benefit under one grant or another, or will not submit himself to be means-tested for benefit, he cannot be helped. We must devise new ways outside the conventional picture of how poverty is removed in order to help these people.
	One of the most helpful aspects of this evening's debate—indeed, I almost felt the ghost of Lord Bauer hovering over us one year after his death—is the fact that we have all become so much more aware that aid is not a simple nor very often an effective way to tackle poverty. We cannot tackle it by just saying that money should be made available.
	If we set criteria for the giving of aid, as regards applying for it and qualifying for it—criteria which, I am afraid, have become more elaborate—that requires a degree of sophistication at the receiving end that the poorest may not often have. In a sense, we now seem to overlay the agenda. We impose so many conditions on those countries that receive money: they have to be gender sensitive; poor people must participate directly; they must have sustainability; they must have environmental friendliness; and they must have transparency, accountability, and so on. Civil society must also participate. We take it for granted that every country has a civil society. I do not see why we should do that, just because we have text books with diagrams and statements on society.
	When aid is given, it should be given by one government to another or by one corporate organisation to another. Very often, problems arise at both ends. They arise at the giver's end because the motives of a giving government are bound to be mixed. They do not just want to help the poor; they want to receive some credit for doing so. There might be a diplomatic or international relations angle involved, or they might want to sell arms or other products. You cannot fault a democratic government for wanting to get a bang for its buck, which can distort aid. As for the receiving end, not all countries or states necessarily rule in the interests of their people. That is a shocking comment to make, but that is the way it is.
	I have long argued that, as far as possible, aid should not be given directly to governments; it should be given to NGOs at home, or in the receiving country. I know that there are problems in that respect, because there may not be NGOs in the country concerned. Very often, only very well directed aid, administered by people on the ground who know the facts, will work. The same applies at the giving end. If somehow we could remove governments from the scene and make it an arm's length operation whereby money would be put into some big account and then distributed on criteria that are simple but—it is to be hoped—objective, we might improve our ability to control the usefulness of aid.
	The problem remains that the poorest of the poor countries may still not benefit. What we probably need is an expanded funding facility—something that my right honourable friend the Chancellor of the Exchequer has proposed. We ought to issue what I would call "human development bonds", which should, if possible, be cancelled on the principle that recipient countries would never have to pay back the money. We should be able to give these countries money—not expertise, capacity or building, just straight money. We ought to say to them: "Here is money. You do not have to pay it back. We will service your debt. We will take the debt as ours, not yours, and give you this money". The proviso could be a simple efficacy criterion, such as a 1 per cent improvement on the human development index in five years—just one simple device.
	We make the problem of receiving or administering aid very difficult. Some years ago, the LSE Centre for the Study of Global Governance, of which I happen to be the director, issued a research report based on the findings of Dr Lily Nicholls. She visited UNDP offices and headquarters in Africa asking people what the difficulty was. It was that people in New York went on adding new desirable objectives that had to be achieved. The recipients could not understand how to cope with the multiple objectives and targets set.
	If we think of our own historical development process, or that of any developed country, none of the criteria was fulfilled: we were not transparent; we were not accountable; we did not always participate; we were not ecologically friendly; we were not gender sensitive; we were not democratic; and we were not non-corrupt. Why, just because we give a pittance to other people, do we expect such bossy behaviour to be received properly? I do not understand why we think that it will be effective in removing poverty, whatever desire we have to show that we are virtuous.
	I would love to think that if we could give money—perhaps not to governments but directly to the citizens of poor countries—it could somehow enable them to make their own effort to get out of poverty. We are not giving enough attention to how poor people get themselves out of poverty. We always assume that we must do it for them. So we have policies that restrict labour migration, whereas it has been one of the most effective ways by which people have got themselves out of poverty. People living in a poor region have got out of poverty by leaving that region and going somewhere else where there are better job opportunities. We think, "No, the poor can stay where they are and we will give them resources"—and, of course, we do not give them resources. We do not let them move and we do not let them trade. We have to re-examine this policy.
	In specific answer to the Question put by the noble Baroness I still say that if we could find a simple device—let us say, of giving each citizen in the poorest countries of the world one dollar a week, not even a day, no questions asked, and making quite sure that it goes to the citizen, I think we could do more than by doing anything else.
	People often say, "These problems are not solved by throwing money at them". I say, "Just try".

The Earl of Sandwich: My Lords, does that mean that we must do away with economists and accountants?

Lord Desai: Absolutely, my Lords, and experts—and, it is to be hoped, statistics, which I have made my living from teaching and compiling. The noble Earl complained about bureaucracy. Let us get rid of all the intermediaries and give money directly to the people and see what they do with it. It might benefit them. I would benefit if someone gave me money!

Lord Elton: My Lords, I think the speech of the noble Lord, Lord Desai, peaked in about the seventh minute. I commend the seventh minute to your Lordships' attention. After that, it became slightly haphazard. But the Lord loveth a cheerful giver, and I am sure that he loves the noble Lord, Lord Desai.
	The world has shrunk astonishingly since I was born into it—and even more astonishingly since the Secretary of State was born into it. I join other noble Lords in welcoming her presence in marking the importance of this debate, which is far greater than the number of noble Lords present signifies or the attention that the subject is likely to receive outside.
	When I was a child and a young man, the world was a solid rock platform from which one occasionally looked up to see an interesting collection of tiny scintillating lights and then got on with one's own local affairs. Since then, we have seen the world from space and we realise that we are surrounded not my tiny moats of dust but by millions of suns, all bigger than ours. We are not on a solid rock platform but on something more like a fragile raft in a perilous and lonely sea. We share that raft with the rest of the human race, which puts the debate into perspective. We were once able to see only those countries on our own side of the sphere, which meant that every country on the other side was reduced to merely a shape on a map and every condition to a statistic on a table.
	The statistics have become frightening. I recently picked up a couple which shook me. I discovered that the average GDP per capita in a country such as Sierra Leone is one forty-ninth of what it is in this country and that the life expectancy of its children is less than half that in this country.
	We can now see those statistics; they are faces on our television screens. Suddenly, those impersonal statistics have become as much our neighbours as did the man who fell among thieves become a neighbour to the man on the road to Damascus. We cannot therefore ignore them.
	Today we are discussing the way in which we help those countries. I welcome what the noble Lord, Lord Desai, said about throwing money at the problem. While I confess that I know less about economics or aid than anyone else taking part in the debate, I believe that the focus of the debate is on the structures by which we can help these countries. That is not necessarily by giving them aid but by giving them a fair chance to take part in world trade.
	That is currently achieved by representation at the World Trade Organisation. I recently picked up the report of the Economic Affairs Committee on globalisation. I read that Mike Moore, the Director-General of the WTO, indicated that 28 or 29 of its members were not represented in Geneva. He also indicated that the WTO attempted to respond to that uneven representation by funding poorer countries to attend meetings in Geneva twice a year.
	Large countries have permanent representation on the WTO. I understand that the United States has about 40 representatives, half of whom are diplomats and trade delegates. The same applies to Europe. The United Kingdom has 15 to 20, of whom 10 are trade delegates. Bangladesh has only one representative and many countries have none. Merely to pop someone in twice a year and expect that to produce dividends for the country is ludicrous.
	During debate on the G8 Statement, I suggested that we ought to consider something like Short money for countries which cannot be present in Geneva. That would enable them to be there on a permanent basis. Perhaps they should appear collectively—perhaps there should be a commonality, a group of these countries. They would then be able to have some influence. We already give a proportion of our aid to structural assistance, but I understand that that is given to the home countries, giving the basis on which they can obtain the information and administer grants. As I said, I am ignorant in this field but the Secretary of State will put me right. I am talking about addressing the problem at the WTO end, which is complementary, but the two together should make for effective representation.
	Achieving change will be a slow process, considering the weight that is pitched against such countries and the fact that Europe is one of the most expensive places to produce sugar. Yet Europe produces 40 per cent of all world sugar exports. As a result of subsidy, we dump against the people in poor countries trying to produce it. That will take a long time to change.
	There is, however, a still different picture. I speak of the moral position: I think it is unacceptable that we do nothing about this issue. We have to do something, for reasons obvious to anyone with a moral outlook, let alone a religious one. For those not concerned with that kind of issue, the stark fact is that a world which has such really repellent levels of wealth difference is a very unstable and unsafe world; but it is a very good world in which to recruit people to fly Jumbos into skyscrapers and claim that this somehow will redress the balance of wealth and power. So we have a purely material self-interest in addressing this problem.
	That is a challenge to any government of any party because doing anything substantial about it will mean that we are less well off than we are now. It will cost us. Electorates do not like that. So, first, this requires courage in a government; secondly, there should be discussions between parties so that the matter is taken out of the electoral equation—I know I am talking about something almost impossible. Therefore, electors will know that voting for one party or another will not suddenly make them worse off because that party has a conscience about these matters and understands the threat to this country. Elections are fought on short-term issues and this is a very long-term issue.
	Thirdly, the issue must be made more appealing in some way. I was caught by the idea of my noble friend Lord Saatchi of having a national holiday to mark the day on which one finishes working for the Chancellor of the Exchequer and starts working for oneself. I think that our party—and I commend other parties to do so also—should set a target in the next Parliament to bring that date back at least three days and to give the yield of one of those days to the kind of initiative I talked about—paying to help the less fortunate countries become more fortunate.
	I thank the noble Baroness for bringing the matter forward. It is one of increasing and very great importance.

Baroness Northover: My Lords, I, too, thank the noble Baroness, Lady Whitaker, for introducing this important and wide-ranging debate. As the noble Earl, Lord Sandwich, has said, how we reach the poorest is indeed a fundamental question; and it is surely useful to return to such fundamental questions. Once again the expertise in your Lordships' House has been very evident in the wide-ranging brainstorming that has occurred.
	The need for over-arching international organisations is borne out by the debate today. Such organisations may need reform and improvement; but if they were not there, we would need to invent them; and we should always be wary of undermining and circumventing them.
	The very existence of the Millennium Development Goals reflect international concern about this area and helps us focus on how aid is targeted, even if we know that many of those goals will not be met by 2015. Progress can be seen, and these important targets must have helped us achieve what has been secured so far.
	I share the enormous concern of the noble Earl, Lord Listowel, about the way in which the tragedy of HIV/AIDS is plunging Africa, in particular, into worse problems.
	The giving of aid has been a relatively recent historical development. Of course there are many factors in play. Those with an imperial past may well have stronger ties with their old colonies and seek to assist them first. But there are also many other political factors. Too often aid is tied to the interests of the donor countries. The EU's record in that area, as the noble Baroness, Lady Whitaker, and the noble Lord, Lord Hannay, have said, has been highly unsatisfactory. There are a few welcome signs of that changing, and I look forward to hearing from the Secretary of State how that is progressing. I should also like to know what proposals for reform of the CAP we might see coming down the track. As the noble Lords, Lord Hannay and Lord Elton, rightly said, trade rather than aid must be the key to development.
	The United States has been quite blatant in its political use of aid. Thus an analysis of the £2.4 billion increase in aid announced by the Bush Administration earlier this year shows, for example, that one third of the total will go, not to health services or schools, but to supply foreign countries with US arms and training. So much for a budget that professed to "promote compassion".
	We saw the use of the US aid budget in the run-up to the war in Iraq. Note the African Growth and Opportunity Act 2000, which allows eligible sub-Saharan countries duty-free and quota-free access to the American market. But a country can become eligible only if it,
	"does not engage in activities that undermine United States national security or foreign policy interests".
	That came into play as the US arm-twisted for support at the UN. I trust and believe that we did not do the same. Are we taking any action to encourage the United States to move away from such political approaches to aid?
	However, as others have said, the relief of poverty may often depend a great deal on the nature of governance in particular countries or areas. Thus the people of Iraq were impoverished by sanctions imposed by Western powers. The greatest challenge for the international community is surely to help poor people living under oppressive regimes without assisting the governments that oppress them. That can clearly be seen in the cases of Burma or Zimbabwe. In Somalia, there is no formally recognised government, and the United Kingdom Government have made further aid contingent on the peace process making concrete advances and there being subsequent political progress. It is an understandable position, but one that leaves the Somali people in poverty.
	Is it important to have links to donor countries? I shall take the example of Burundi, which does not have such links. Burundi is currently the third lowest ranked country on the human development index. Life expectancy dropped from 54 years in 1992 to just over 40 years by December 2002. It lacks attention from donor countries, and the funds pledged to it are pegged to the resolution of conflict; therefore, so far, less than a quarter of funds pledged have been released. Yet, clearly, aid could help to reduce the conflict in Burundi, so it is in a catch-22 situation. Certainly it might be argued that a donor country with a strong interest in Burundi would have worked out the areas in which a limited release of development aid could play a real role in bringing peace.
	On the other hand, there can also be a danger that links may be too close. In the Great Lakes region, the issue is not that the states lack strong links to major donor countries so much as that there has been no consistency or co-ordination between major donors. For instance, the UK has been the largest bilateral donor to Rwanda and Uganda for some years but has had a very limited relationship with the DRC. France, on the other hand, has supported the DRC but not Rwanda and Uganda. Given that those three states have been in conflict with each other over the past few years, better co-ordination between the UK and France might have applied more effective pressure to end the conflict. But, due to historical reasons, the agendas of France and the UK have remained opposed and regional conflict has continued.
	From a UK perspective, some argue that the close nature of the UK relationship with Rwanda and Uganda made the UK less sensitive about its engagement in the regional conflict than perhaps we should have been. So even close relationships, then, may not be the answer. Consistent interest—but a truly effective international perspective—is surely important. That is why in so many respects the decision by the United Nations Security Council to send peacekeeping forces to the DRC, to be carried out under EU auspices—the first time that that has been done outside Europe—is to be welcomed.
	Again, if we consider HIPC countries, we find that they have a fairly strong relationship with the major donors, because they are required to work in partnership with creditors. However, the World Bank itself, in a recent report, admits that donors need to take a more active role. Consistent attention is not necessarily given. The World Bank is itself considering what it defines as low-income countries under stress to address the particular problems of the poorest and least developed countries which suffer from conflict and poor governance. It proposes to facilitate change, but not necessarily through increasing lending. Various transitional measures are proposed to try to advance that, and I should like to hear from the UK Government their views on the proposals.
	As we have heard, so many factors complicate whether aid is reaching those who most sorely need it. A lack of links with donor countries or international institutions may be one, but here the argument must be for strengthening and reforming international institutions so that the needs of the poorest can be best identified and addressed.
	However, in many respects, that is probably not the greatest problem. Perhaps the most important issue that we need to address is that of governance—how, in countries with appalling and oppressive governments, the international community gets aid to the poorest people, so that their economies can develop and they can trade internationally. That must be the real challenge, and international co-operation to achieve that must surely be the way forward.

Baroness Rawlings: My Lords, I, too, thank the noble Baroness, Lady Whitaker, for initiating this critical debate. It is timely following the recent G8 talks at Evian and covers a wide range of related topics, including HIPC and the Doha trade talks.
	In the short time available, I shall explore in more depth one issue mentioned by the noble Baroness, Lady Whitaker: armed conflict in relation to poverty, because trade and all other solutions discussed by your Lordships in the debate become meaningless without peace.
	One of the main stumbling blocks is the Government's lack of openness about exactly what criteria are used to make decisions on our involvement with a country. It is as simple as rewarding success and penalising failure, in terms of meeting set conditions: for example, economic growth policy; trade liberalisation; political freedoms; and good governance. As the noble Lord, Lord Hannay, said so clearly: why have so many of those initiatives failed?
	Do DfID and the FCO use the same criteria? Will the Secretary of State make those criteria available to the House? It is difficult to insist that there is transparency and accountability in developing countries and their governments unless we are transparent and accountable. That is particularly obvious with regard to the problem of conflict countries, a problem that many noble Lords have woven through their speeches this evening. Countries with civil wars are more common today than they were 40 years ago. That is mainly because most of the countries fighting then were colonies, so it was possible for powerful outside forces to impose stability. Today, counting wars with more than 1,000 violent deaths, one country in eight is involved in civil war. Alas, we cannot separate conflict from development. A century ago, most conflicts were between nations, and 90 per cent of the casualties were soldiers. Today, almost all wars are civil wars, and 90 per cent of the victims are civilians.
	Most conflicts today are in Africa, most notably at the moment the ongoing tragedy in the Democratic Republic of Congo, Burundi and Sudan. Those are the countries that find it most difficult to establish funding relationships with donors. The best predictors for conflict are low average income, low growth and high dependence on exports of primary products such as oil and diamonds. Poverty fosters war, and war impoverishes. A typical civil war leaves a country 15 per cent poorer than it would otherwise have been and with about 30 per cent more people living in absolute poverty. Having a neighbour at war reduces economic growth by about 0.5 per cent a year.
	There are also non-monetary costs. For each 1,000 refugees who flee from one tropical country to another, the host country suffers an extra 1,406 cases of malaria, not to mention the transmission of HIV/AIDS by men in combat. That works against the achievement of the millennium development goals by 2015.
	A recent World Bank study by Paul Collier shows that, when income per person doubles, the risk of civil war halves and that, for each percentage point by which the growth rate rises, the risk of conflict falls by a point. Another study shows that halving military manpower correlates to a reduction of a quarter in HIV among low-risk adults.
	We are stuck with a paradox, aptly demonstrated by the situation in Burundi: peace will not be possible without international financial support, and that international support will not be forthcoming until peace is achieved. I ask the Secretary of State to tell us what plans there are to break the cycle with the injection of carefully targeted and monitored aid. We recognise the danger of providing moneys to countries at war, and we recognise that there are many issues about aid effectiveness. Could it not be properly managed through independent NGOs, thus providing alternative livelihood strategies to generations who would otherwise, perhaps, pick up a gun? Spending money on education and health seems to provide immediate boosts to the economy of conflict nations. It shows that those Governments are serious about peace, buoying confidence and encouraging private investment.
	The many developing countries involved in civil conflict need to be reassured that this country and this Parliament, as we heard this evening, take an intense interest in what is going on. We must be proactive and reactive. We must be critical in our assessment of what occurs and take what steps we can to encourage peace. We must try as best we can to help such countries to meet the millennium development goals. I look forward to hearing the Secretary of State's response to many of the questions that have been posed.

Baroness Amos: My Lords, I thank my noble friend Lady Whitaker for raising what I think is a very important issue. That has been demonstrated by the speeches of all noble Lords today. The effective and fair allocation of aid to poor countries is essential to the task of achieving the millennium development goals. We have worked hard to ensure that United Kingdom assistance is targeted to those who need it most, in settings where it will have the greatest impact.
	Challenges remain to ensure that donors, including the European Commission, deliver aid effectively to those countries where poverty is most acute. Even greater challenges face us in delivering aid to countries where joint working is difficult due to conflict, state failure or extremely poor governance. The Department for International Development is supporting the development of new strategies to engage with these so-called "poorly performing" countries. We are focused on getting the international system to work together more effectively, but much remains to be done.
	The noble Earl, Lord Sandwich, is right when he says that we need to ensure that donor assistance is co-ordinated so that it does not become a burden on developing country governments. Mozambique is a very good example of where donor co-ordination works effectively. That is why we have sought to align donor strategies and have moved to long-term aid partnerships. My noble friend Lord Desai raised the problems associated with criteria for giving aid. The noble Baroness, Lady Northover, raised the issue of tied aid. Perhaps I may remind the House that we have untied all our aid, but we want to support countries which are committed to reform. It is important to remember that our citizens expect no less.
	There is strong evidence that aid works to promote growth and it works to reduce poverty. Aid is most effective where good governance and sound economic management are in place. But we also know that the impact of aid is greatest where poverty is most acute. DfID's allocation of aid is targeted largely on the poorest countries. We also have smaller aid programmes in middle-income countries, such as the Ukraine and South Africa, where our targeted assistance can help with policies to promote growth and address poverty.
	Although we provide assistance to a large number of countries, we do not try to cover all countries that are poor. It makes sense to have a focus on those poor countries where we have developed experience over the years. But we have also engaged with other countries where there are pressing problems and we think that we have particular knowledge or expertise to offer. Examples include Rwanda and the Democratic Republic of Congo.
	We have made a commitment that by April 2006, the share of our country programmes going to low income countries will rise from 78 per cent to 90 per cent. Even where we do not give aid bilaterally, we still make significant contributions through international organisations, such as the World Bank and the UN agencies. I assure the noble Baroness, Lady Northover, who raised in particular questions about US aid policies, that we strongly advocate a greater poverty focus by other donors. We have a number of bilateral discussions, as well as discussions in the context of the World Bank and the IMF, on these matters.
	It is important that donors do not ignore poor countries. It is even more important that we do not ignore poor people. My noble friend Lord Desai suggested that we needed to get rid of statistics. So I apologise to him as I am going to quote some now, but I think that they are relevant. One of the most telling statistics is the total aid divided by the number of poor people in a country. The people of Niger do not fare well, having received only £21 per poor person in 2000. Mali comes out somewhat better at £30, while Laos is £133 and Moldova is £153 per poor person. However, these figures are sobering when one considers the enormous poverty that these countries face.
	Yet they must be seen in comparison with other countries—particularly the large population countries—where need is also great. The comparable figure for Nigeria was only £1 per poor person in 2000. That is because Nigeria is the country in Africa with the greatest population. For India, the figure was £2, China, £5 and Bangladesh, £20 per poor person. If there is discrimination, it is against those countries with large populations. That is why our strategy in the Department for International Development focuses a great deal of effort in sub-Saharan Africa because that is where we are least likely to meet the millennium development goals, but we are very conscious that we have significant aid programmes in Pakistan, India and Bangladesh because those are the countries that have the greatest proportion of poor people.
	However, we and other donors could not justify giving most of our aid to a handful of very large countries. We need to consider the balance of countries and where aid will make the most impact for every pound spent. We must also remember that our development programme is not only about funding, it is also about building capacity, transferring knowledge and skills and securing fair global policies on trade and investment.
	The noble Lord, Lord Elton, raised the issue of building capacity, in particular as regards trade negotiations, and my noble friend Lady Whitaker referred to the need for developing countries to have an equal voice. The WTO is a membership organisation, which is why it is so important that developing countries have a voice. We have been building the capacity of developing countries. For example, we fund a regional negotiating machinery mechanism for the whole Caribbean region to enable those nations to engage more effectively in trade negotiations. We have also supported developments in the World Bank and the IMF in respect of giving developing countries a stronger voice.
	With respect to the European Commission, the latest figures show that only 44 per cent of EC assistance goes to low-income countries, and we contribute up to £1 billion annually to the EC's external activities. That is why we have focused on reforming EC aid. Increasing the Commission's poverty focus is one of our priorities and I can assure my noble friend Lady Whitaker that we have worked to ensure that these issues are considered in relation to the discussions on the Convention on the Future of Europe.
	My noble friend also raised the question of aid to governments that are weak, corrupt or undemocratic. On the whole, countries with weak governments, institutions and policies tend to receive less aid and it is usually the people in poverty who suffer, not those in power. The noble Lord, Lord Hannay, was quite right to say that the long-term cost of ignoring these countries is significant, and I agree with the noble Lord, Lord Elton, that part of that cost could be increased global instability. Many of these countries are in situations of conflict, such as Somalia, DRC and Sudan, and our first task must be to lend support to end the conflicts and provide humanitarian assistance. Other countries such as Afghanistan are just emerging from conflict and need targeted assistance to rebuild their institutions.
	Countries that have undemocratic and repressive regimes such as Zimbabwe and Burma are unable to attract much aid from donors. In any event, they would not be able to absorb aid effectively until democracy and sound governance are restored. There are also states where the capacity of the government is weak, where corruption is endemic or where the breakdown of law and order threatens both growth and human security. In those states, too, our traditional systems for delivering aid are not likely to work.
	We cannot abandon the poor in such circumstances. To neglect these countries would not only perpetuate poverty, it could well contribute to the collapse of the state, with adverse consequences for both neighbouring states and the global community. The noble Lord, Lord Hannay, spoke very powerfully about that. The answer is not to disengage, but to engage differently.
	It is difficult to provide aid effectively to poorly performing states. We have to find ways of delivering assistance to poor people without stimulating dysfunctional politics or inadvertently aiding repression. I can assure the noble Lord, Lord Hannay, that we are examining the policy options in this area so that we can make our own programming more effective.
	The noble Baroness, Lady Northover, spoke about the work of the World Bank and the unit it has established, called the low income countries under stress unit. The unit receives its main bilateral support from DfID and is promoting new ways for the World Bank to provide strategic assistance to poorly performing countries, even when those countries do not qualify for bank funds through the usual channels.
	We are also working with other bilateral donors through the Development Assistance Committee of the OECD and we are taking the lead in supporting and co-chairing a learning and advisory process on difficult partnerships. The aim is to ensure that bilateral donors do not ignore the poorly performing states.
	Let me deal with specific questions raised during the debate. The noble Earl, Lord Listowel, referred to Angola. Of course Angola is in a post-conflict situation and we need to work with its government to ensure that they put reform processes in place to release resources which can then be spent in areas such as health and education.
	The Government of Angola have to put the needs of their people first. We have discouraged the Government of Angola from holding a donor conference until such time as they have clearly instituted an internationally acceptable political and economic reform programme. I stated to the Government of Angola when I visited that country that we are willing to play our full part in such a conference when the time is right.
	The noble Earl also referred to Angola's application to the Global Health Fund for help in tackling HIV/AIDS, TB and malaria. We have recently increased our funding to the Global Health Fund to 280 million US dollars. I hope that Angola's application to the fund is successful but I agree with the noble Earl that we cannot look at the issue of HIV/AIDS in isolation. That is why we have focused a great deal of our attention on strengthening health systems in the developing countries in which we work. I shall of course communicate with the Government of Angola and encourage them to continue to work on their HIV/AIDS strategy, and in particular on the implementation of the strategies referred to by the noble Earl.
	The noble Earl, Lord Sandwich, referred to the departmental report and gave it a positive response. I cannot take any credit for that report. It was launched on the day after I became Secretary of State for International Development. The department and my right honourable friend Clare Short should take the credit.
	As to the noble Earl's question on decentralisation and devolution, we support the decentralisation efforts of many countries. It is an effective means of enhancing responsiveness to the poor and, in the PRSP context, we support decentralisation only if it is government policy; we do not impose it.
	The noble Baroness, Lady Northover, raised the question of greater co-ordination between the United Kingdom and France in the Great Lakes region. She may recall that my right honourable friend the Foreign Secretary visited the Great Lakes with his French counterpart last year. Britain and France have not always agreed on policy for the Great Lakes—I agree with the noble Baroness that this has been to the detriment of policy for that region—but we are now working much more closely together. Our contribution to the French-led international force in the DRC is a good example of that.
	The noble Baroness, Lady Rawlings, raised the issue of the criteria we use in regard to funding and stated that she felt that the Government lacked openness and transparency. I am surprised. We have long-term partnerships, which are negotiated with the governments of developing countries and include consultations with key stakeholders; we publish a country assistance plan setting out our analysis and the areas we will support; and those plans are evaluated. It is probably the most open process there is.
	Noble Lords will find on our website a wealth of information about the issues we take into account when considering our support for developing countries. The Foreign and Commonwealth Office is developing criteria for its own global opportunities fund and I have no doubt that that criteria will be open.
	The noble Baroness also raised the issue of Burundi. I agree that peace and security are absolutely critical, and we are giving direct support to the people of Mozambique who, with South Africa and Angola, are contributing to the African peacekeeping force in Burundi. Until that happens, we cannot move to any kind of wider development programme.
	I have run over time, but perhaps noble Lords will let me answer the last two points and conclude. My noble friend Lord Desai suggested the development of a human development bond. I would like to discuss that with him. As he knows, my right honourable friend the Chancellor has suggested an international financing facility which would double the amount of aid available and enable us to meet the millennium development goals by 2015. The noble Lord, Lord Elton, also came up with a creative solution which perhaps I should discuss with him outside the Chamber.
	We are committed to building strong donor partnerships, particularly with the poorest countries. It is important that states are not overlooked due to historical accident or donor fashion, and that subjective aid allocation systems are put in place to help ensure fairness.
	The noble Lord, Lord Hannay, suggested four areas in which he thought we should take action and which would assist. The first was reform of the European Union. We are working hard to find ways of reforming the Commission's aid policy. The second was with respect to debt. The noble Lord will know that we have pushed very hard to ensure that countries do not leave the HIPC process with unsustainable levels of debt. We will continue to do that.
	The third area the noble Lord mentioned was working through regional and sub-regional organisations. We continue to do that, not just in the area of building peacekeeping capacity and dealing with conflict but with respect to trade and other areas. This is a key mechanism with respect to the New Partnership for Africa's Development.
	The fourth area was trade, which was also mentioned by the noble Lord, Lord Elton, and others. We are pushing very hard for reform of the common agricultural policy; we want to see a decoupling of subsidies for production. Noble Lords will know that my right honourable friend Margaret Beckett has been arguing our case very strongly in the EU Agriculture Council. We will continue to press for reform because we want these reforms now, ahead of the discussions at the WTO meeting in Cancun in September. We continue to work hard to find new ways to engage with poorly performing countries to ensure that neither multilateral nor bilateral donors neglect them.
	These are some of the challenges that must be met. I believe they can be met, and the Government will continue to work towards that end.

House adjourned at two minutes before nine o'clock.